Reference library

Commercial lending terminology, clearly explained.

Use this glossary to connect facility structure, servicing calculations, syndicated lending, trade finance, CRE and operational controls.

Jump toFacility structure Servicing & calculations Syndicated lending Trade finance & CRE Risk & controls

A B C D E F G I L M P R S T U

Glossary area

Facility structure

8 terms

Availability: The amount a borrower may currently draw after considering commitments, existing usage, sublimits, eligibility rules and other contractual restrictions.; Explore related learning
Borrower: The legal entity that receives credit and owes the payment and performance obligations stated in the finance documents.; Explore related learning
Commitment: A lender’s contractual maximum funding obligation under a facility or tranche, subject to the agreement and any applicable conditions.; Explore related learning
Facility: The contractual credit arrangement establishing the available products, limits, currencies, maturity, pricing and operating rules.; Explore related learning
Guarantor: A party that undertakes specified obligations supporting repayment or performance by the borrower, subject to the guarantee terms.; Explore related learning
Revolver: A facility that generally permits borrowings, repayments and redraws during an availability period, within the applicable commitment and conditions.; Explore related learning
Term loan: A loan funded for an agreed term and repaid according to scheduled amortization, maturity or other contractual repayment provisions.; Explore related learning
Tranche: A distinct portion of a financing structure with its own limit, currency, product, maturity, pricing or repayment characteristics.; Explore related learning

Glossary area

Servicing & calculations

12 terms

Accrual: The amount of interest or fees recognized as earned or incurred over an elapsed period, whether or not cash has been paid.; Explore related learning
Benchmark rate: A published reference rate used as one component of floating-rate pricing, such as SOFR, SONIA, €STR, SARON or another currency benchmark.; Explore related learning
Business-day convention: The contractual rule for adjusting a date that falls on a non-business day, such as following, modified following or preceding.; Explore related learning
Commitment fee: A fee commonly calculated on an unused commitment for an agreed period, rate and day-count basis.; Explore related learning
Day-count convention: The method used to convert elapsed days into a fraction of a year for interest or fee calculations, such as Actual/360 or Actual/365.; Explore related learning
Drawdown: A borrowing made under an available facility after the request, conditions, amount, currency, date and payment instructions are validated.; Explore related learning
Margin or spread: The contractual percentage added to a benchmark rate to determine a floating interest rate, subject to floors, tiers and other adjustments.; Explore related learning
Payment waterfall: The contractual priority used to apply available cash among fees, interest, principal and other obligations.; Explore related learning
Payoff statement: A time-sensitive statement of the amounts and conditions required to satisfy specified loan obligations on a proposed payoff date.; Explore related learning
Repricing: A change to the applicable pricing basis, rate option, margin or interest period for an existing borrowing, processed under the agreement.; Explore related learning
Rollover: The continuation or replacement of a maturing borrowing for a new permitted period, sometimes combined with a partial repayment or rate-option change.; Explore related learning
Utilization fee: A fee whose rate or application is linked to the level of facility usage under the contractual pricing rules.; Explore related learning

Glossary area

Syndicated lending

6 terms

Administrative agent: The party appointed under a syndicated facility to coordinate notices, funding, records, calculations and cash movements for the lender group.; Explore related learning
Assignment: A documented transfer through which an existing lender transfers contractual rights and, where applicable, obligations to another lender.; Explore related learning
Facility agent: An agent that performs administrative and operational duties for lenders under a syndicated facility, as defined in the agreement.; Explore related learning
Participation: An arrangement in which a lender shares economic exposure with a participant while the lender of record generally remains party to the underlying facility.; Explore related learning
Pro-rata share: A lender’s proportionate economic or voting share calculated from the denominator and positions specified in the governing documents.; Explore related learning
Syndicated loan: A credit facility provided by multiple lenders under common documents, typically coordinated by one or more agents.; Explore related learning

Glossary area

Trade finance & CRE

6 terms

Construction draw: A controlled advance under a construction facility, commonly supported by a draw request, inspection evidence, budget status and lien-related documentation.; Explore related learning
Debt service coverage ratio (DSCR): A ratio comparing defined property or business cash flow with required debt service, calculated according to the governing credit definition.; Explore related learning
Issuing bank: The bank that issues a letter of credit or similar undertaking and becomes obligated according to its terms and any incorporated rules.; Explore related learning
Letter of credit: An independent bank undertaking to honor a complying presentation or demand within the instrument’s terms and any incorporated rules.; Explore related learning
Loan-to-value ratio (LTV): A ratio comparing a defined loan amount with an agreed collateral value, subject to the credit documents and valuation policy.; Explore related learning
Standby letter of credit: An undertaking designed to support an underlying payment or performance obligation and drawn when a complying demand is presented.; Explore related learning

Glossary area

Risk & controls

5 terms

Borrowing base: A formula-based limit that determines credit availability from the value and eligibility of specified collateral, commonly receivables or inventory.; Explore related learning
Conditions precedent: Documents, actions or confirmations that must be satisfied or waived before a specified event such as closing or funding may occur.; Explore related learning
Covenant: A contractual promise requiring a party to take an action, avoid an action or maintain an agreed financial or operational condition.; Explore related learning
Event of default: A contractually defined event that may give finance parties specified rights or remedies, subject to the agreement and applicable law.; Explore related learning
Maker-checker control: A dual-control process in which one person prepares or records an action and another independently validates designated information before completion.; Explore related learning