Business Financing Glossary - Contract Terms and Questions to Ask in a Meeting

A conversation about financing can sound simple until you get into the details: fees, early repayment, rules for delays, and collateral clauses. This guide helps you go through that meeting calmly and concretely - you get ready questions that help structure the offer, and a glossary of terms that most often appear in documents.

How to use this material

• Ask the questions during the meeting and request confirmation in a document or email
• Compare offers only once you have the total cost in currency and a repayment schedule
• Check the “bad scenario” - what happens with a 14-30 day delay and what additional costs may appear

Glossary of terms from business financing agreements

Administrative and servicing fees

Fees for managing the financing, servicing the agreement, or monitoring. They may be one time or recurring. Ask for their total amount over the entire agreement period.

APR

Annual Percentage Rate - an indicator designed to help compare cost. In practice, it can be calculated differently depending on product structure. The safest way to compare is total cost in currency and the repayment schedule.

Arrangement fee

A one time fee for starting the process and setting up the financing. Check whether it is refundable and when it is charged.

Assignment of receivables

Transfer of the right to payment from your customer to the financing provider. Most common in products based on invoices and receivables. Key question: who informs the customer, when, and how settlements are handled.

Collateral

A mechanism that reduces risk for the financing provider. Key points are the form of collateral, proportionality to the amount, and clear enforcement conditions.

Commission

A fee for granting financing. It may be charged upfront or included in instalments. Key question: is it linked to the financing term, or is it calculated upfront from the amount regardless of the repayment period.

Contractual penalty and default interest

Costs charged for late repayment. What matters are time thresholds, automatic escalation, and the total cost in a 14-30 day delay scenario.

Disbursement conditions

A list of requirements that must be met before funds are paid out: documents, signatures, collateral, sometimes additional approvals. This is a good place to verify whether “speed” is realistic.

Early repayment

The option to close the financing early. Good financing should have clear early repayment rules and a predictable cost, without “fees for success”.

Early settlement fee

An additional cost charged when you repay before the end of the term. If it exists, ask for specifics: how much it is and in which situations it is charged.

Fee for changing contract terms

A cost that may appear with an amendment, a change of instalment date, a schedule change, or other modifications. It should be clearly described, because it can materially increase total cost in a “worse month” scenario.

Financing term

The period for which funds are provided and during which you repay the obligation. Key question: is the cost calculated proportionally to time, or are some fees charged regardless of the term length.

Grace period

A period during which you repay only interest or you do not repay principal immediately. It can make sense when the financing supports a project that will generate cash inflows later. Check whether the grace period increases the total cost disproportionately.

Guarantee

A form of security where a third party is liable if your business does not repay. Clarify when and how the guarantee can be enforced.

Instalment

The amount due on a given date. Depending on the structure, it may include principal, interest, and fees.

Interest rate

The cost of capital expressed as a percentage. It matters, but it does not show the full price if the offer includes commissions and additional fees.

Master agreement

A document that sets the general cooperation rules and may cover future tranches or products. In practice, it structures the relationship - read it as carefully as the agreement for a specific financing.

Principal

The amount you receive. In agreements it may be described as the “financing amount” or the “principal amount”.

Principal and interest components

Part of the instalment repays principal, and part is the financing cost (interest). With early repayment, check whether interest cost is calculated proportionally to time.

Promissory note

A document used as security. What matters are the conditions for completing it, the amount, and the scenarios in which it may be used.

Reminders and collection fees

Fees for payment reminders and collection actions. They can add up quickly, so it is worth knowing the rates, the timing, and the thresholds that trigger the next steps.

Repayment schedule

A repayment plan: dates and amounts of instalments. The key is alignment with your cash flow and seasonality, not how “neat” it looks on paper.

Restructuring or renegotiation

A change of repayment terms if the situation changes. Good financing should include a real path to conversation and clear rules, not only automatic consequences.

Total cost

The total amount you will repay over the full term: principal + interest + commissions + additional fees. This is the most important number for comparing offers.

Ready questions for a meeting with a financing provider

In a meeting it is easy to get stuck in generalities, because the conversation naturally goes toward speed, availability, and “initial terms”. The questions below keep it where it should be from the start: numbers, the schedule, and how the agreement works in a bad scenario.

Total cost and fees

• What is the total cost in currency - how much will I repay in total?
• What makes up the cost: interest, commission, administrative fees, other fees?
• When are fees charged - upfront, monthly, one time, conditionally?
• Are there fees for an amendment, changing an installment date, or changing the schedule?
• Is there a fee for extension or renewal if it becomes necessary?
  

Schedule and cash flow fit

• What does the repayment schedule look like: monthly installments, weekly installments, other?
• Can instalment dates be aligned with my cash inflow cycle?
• What happens if my customer pays 30 days late - do I have an option to move an instalment date?
• Are there payment holidays or a temporary relief mechanism?
• Does changing the schedule generate additional fees?

Early repayment

• Can I repay early at any time?
• Does cost decrease proportionally if I repay earlier?
• Are there fees for closing the agreement early?

Delays and the “bad scenario”

• What exactly happens with a 7 day, 14 day, and 30 day delay?
• How does the cost increase - in percentage terms and in currency?
• Is there a path to discussion and restructuring, or is everything automatic?
• What formal consequences apply and when do they start?
  

Collateral and documents

• What collateral is required and why this type?
• Under what conditions can collateral be enforced?
• Is the collateral proportionate to the amount and risk?
• Can I receive a template of the agreement and attachments before I decide to sign?

Process, timing, and communication

• What are the process steps and the realistic time from start to payout?
• What documents are required and in what format?
• Will I receive a written offer summary: total cost, schedule, delay rules, early repayment terms?
• Who is the contact after disbursement and what does ongoing support look like?

Three things to request in writing after the meeting

• Total cost in currency with a list of fees
• Repayment schedule
• Rules for a 14-30 day delay scenario and early repayment terms

Summary

A good offer is one you can calculate and that can be described in writing - including the bad scenario. If after the meeting you do not have the total cost, a repayment schedule, and 14-30 day delay rules, you do not have an offer yet - you have a promise.