Free tool · Plain English
The business loan jargon buster
Every lending word you're likely to hear, translated into everyday English, with why it matters to you. Type a word to find it fast.
A
- ABN Paperwork
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Australian Business Number: the 11-digit number that identifies your business to the government and other businesses.
Why it matters: You'll need an active ABN to get a business loan.
Read the lesson → - ACN Paperwork
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Australian Company Number: the nine-digit number ASIC gives a company when it's registered.
Why it matters: If your business is a company, lenders will ask for it.
- Amortisation Loan basics
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Paying a loan down gradually through regular repayments, so the balance shrinks to zero by the end of the term.
Why it matters: It's what a principal-and-interest loan does.
Read the lesson → - Application Loan basics
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The formal request to a lender for a loan, usually with documents. Different from an enquiry, which is just a conversation.
Why it matters: Formal applications can be recorded on your credit file, so make one well-matched application rather than many.
Read the lesson → - Approval Loan basics
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The lender's decision to offer you a loan, usually with conditions attached.
Why it matters: Read the conditions: some must be met before the money is paid out.
- ATO statement of account Tax
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A running summary of what your business has paid and owes the ATO.
Why it matters: Lenders often ask for it to check your tax is up to date.
Read the lesson →
B
- Balloon payment Costs
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A larger lump-sum payment due at the end of some loans, after smaller regular repayments.
Why it matters: Have a clear plan for how you'll pay it before you sign.
- Bank statements Paperwork
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The record of every transaction through your business bank account.
Why it matters: For unsecured loans, they're usually the single most important document.
Read the lesson → - BAS Tax
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Business activity statement: the form you lodge with the ATO, usually quarterly, to report and pay GST and some other taxes.
Why it matters: Lodging on time is one of the strongest signals of an organised business.
Read the lesson → - Borrower Loan basics
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The person or business that receives the loan and must repay it.
Why it matters: For a company, the company is the borrower, and directors often guarantee it.
- Break costs Costs
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Fees some lenders charge if you end a loan before the agreed term.
Why it matters: Ask about them if you might pay the loan off early.
Read the lesson → - Broker Loan basics
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Someone who helps match you with a suitable lender and loan, then helps with the application.
Why it matters: A good one matches you carefully instead of sending your details everywhere.
- Buffer Money
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Money left over after all your costs and repayments, kept for surprises.
Why it matters: A loan is comfortable when there's still a buffer in your slowest month.
Read the lesson →
C
- Cash flow Money
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The money moving in and out of your business over time.
Why it matters: Profit tells you if you make money; cash flow tells you if you can pay the bills this week.
Read the lesson → - Caveat Security
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A notice lodged on a property's title telling anyone who searches it that someone else has an interest in the property.
Why it matters: A caveat loan uses this notice as the lender's protection.
Read the lesson → - Chattel mortgage Security
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A loan to buy an item, like a vehicle or machine, where the lender takes security over that item.
Why it matters: Common for vehicles and equipment.
- Collateral Security
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Another word for security: something valuable the lender can rely on if the loan isn't repaid.
Read the lesson → - Conditions Loan basics
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Things that must happen before or after a loan is paid out, such as providing a document or registering security.
Why it matters: Read them closely; they're part of the deal.
- Credit file Credit
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The record held by credit reporting bodies of your credit accounts, repayment history, applications and any defaults.
Why it matters: You can get a free copy every three months.
Read the lesson → - Credit score Credit
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A number summarising your credit file. In Australia it runs from zero to 1,000 or 1,200, depending on the credit reporting body.
Why it matters: Lenders read the detail on your file, not just the number.
Read the lesson →
D
- Debtor Money
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Someone who owes your business money, such as a customer with an unpaid invoice.
Why it matters: Chasing debtors is one of the quickest ways to improve cash flow.
- Default Credit
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An overdue debt that a provider has formally listed on your credit file. Defaults generally stay for five years.
Why it matters: Paid defaults, with an explanation, are viewed very differently from unpaid ones.
Read the lesson → - Depreciation Tax
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Spreading the cost of an asset over its useful life.
Why it matters: It affects how equipment purchases are treated at tax time.
Read the lesson → - Director ID Paperwork
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A unique identifier every company director needs. Directors must have one before a company is registered.
Read the lesson → - Dishonour Money
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A payment that bounces because there isn't enough money in the account.
Why it matters: Frequent dishonours are one of the biggest red flags on bank statements.
Read the lesson → - Drawdown Loan basics
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Taking money out of a loan or line of credit.
Why it matters: With a line of credit, you only pay interest on what you've drawn.
Read the lesson → - Drawings Money
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Money a business owner takes out of the business for personal use.
Why it matters: Lenders count it when checking affordability, so be realistic.
E
- Equity Security
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The part of a property (or business) you own outright: its value minus what's owed on it.
Why it matters: Property-secured loans are based on your equity.
Read the lesson → - Establishment fee Costs
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A one-off fee for setting up a loan.
Why it matters: Check whether it's paid upfront, taken from the loan or added to it.
Read the lesson → - Exit strategy Loan basics
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Your plan for how a loan, especially a short-term one, will be repaid, such as from trading, a sale or a refinance.
Why it matters: Lenders will ask; have a clear answer.
F
- First mortgage Security
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A mortgage where the lender is first in line on the property's title.
Read the lesson →
G
- GST Tax
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Goods and services tax. You must register once your GST turnover reaches $75,000.
Why it matters: Lenders check your GST registration lines up with your turnover.
Read the lesson → - Guarantor Security
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A person who promises to repay a loan if the borrower can't.
Why it matters: Company directors are usually asked to be guarantors.
Read the lesson →
H
- Hire purchase Loan basics
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Paying for an item in instalments, and owning it once it's paid off.
I
- Instant asset write-off Tax
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A tax rule letting eligible small businesses immediately deduct the cost of eligible assets under $20,000 each, now permanent from 1 July 2026.
Why it matters: Ask your accountant before buying for tax reasons.
Read the lesson → - Interest Costs
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The lender's charge for letting you use its money, calculated on the balance you owe.
Why it matters: Every loan is priced on your circumstances.
Read the lesson → - Interest-only Loan basics
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Repayments that cover just the interest for a period, leaving the balance unchanged.
Why it matters: Know how and when the balance will be repaid.
Read the lesson →
L
- Lender Loan basics
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The bank or non-bank business that provides the loan.
Read the lesson → - Letter of offer Paperwork
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The written offer setting out the loan amount, term, repayments, fees, security and conditions.
Why it matters: Read every page before you sign.
- Line fee Costs
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A charge for keeping a credit limit available, whether or not you use it.
Read the lesson → - Line of credit Loan basics
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An approved limit you can draw from, repay and draw again.
Why it matters: Best for repeating, short-term needs.
Read the lesson → - LVR Security
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Loan-to-value ratio: the loan amount compared with the property's value.
Why it matters: Lenders limit how much of a property's value they'll lend against, leaving a buffer.
Read the lesson →
M
- Mortgage Security
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A legal interest over property given to a lender as security for a loan.
Read the lesson →
N
- Non-bank lender Loan basics
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A lender that lends money but doesn't take deposits like a bank.
Why it matters: Can be more flexible for newer businesses or credit bumps.
Read the lesson →
P
- Payday Super Tax
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Rules from 1 July 2026 requiring employers to pay super with wages, so it reaches the fund within 7 business days.
Why it matters: Super now sits alongside wages in your cash flow.
Read the lesson → - PAYG instalments Tax
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Regular prepayments towards your income tax, reported on your BAS if you're in the system.
Read the lesson → - PAYG withholding Tax
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Tax you hold back from employees' wages and pay to the ATO.
Read the lesson → - Personal guarantee Security
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Your personal promise to repay a business loan if the business can't.
Why it matters: Read it carefully and get independent advice.
Read the lesson → - PPSR Security
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Personal Property Securities Register: the national register where security interests over things like vehicles and equipment are recorded.
Why it matters: Lenders may register their interest in business assets here.
- Principal Loan basics
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The amount you actually borrowed, before interest and fees.
Read the lesson →
R
- Refinance Loan basics
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Replacing an existing loan with a new one, often with a different lender.
Why it matters: A common way to repay a short-term loan.
S
- Second mortgage Security
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A mortgage that sits behind an existing home loan on the title, using the spare equity.
Read the lesson → - Secured loan Security
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A loan backed by an asset, usually property, that the lender can rely on if it isn't repaid.
Why it matters: Property-secured business loans range from $20,000 to $5,000,000.
Read the lesson → - Security Security
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Something valuable the lender has a legal claim over until the loan is repaid.
Read the lesson → - Serviceability Money
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Lender-speak for whether you can afford the repayments.
Why it matters: Test it against your slowest month.
Read the lesson → - Settlement Loan basics
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The final step of a property-secured loan, when security is registered and funds are paid out.
Read the lesson → - Sole trader Paperwork
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A business run by one person who is legally responsible for all of it.
Read the lesson →
T
- Term Loan basics
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How long you have to repay the loan.
Why it matters: Shorter terms mean bigger repayments but usually less total cost.
Read the lesson → - Title Security
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The official record of who owns a property and what's registered against it.
Read the lesson → - Total cost Costs
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Everything you'll repay over the life of a loan, including interest and all fees, minus the amount borrowed.
Why it matters: The fairest way to compare offers.
Read the lesson → - Turnover Money
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The total money your business brings in from sales before expenses.
Why it matters: Unsecured loans are sized on turnover and bank statements.
Read the lesson →
U
- Unsecured loan Loan basics
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A loan without property security, based on the business's cash flow and track record.
Why it matters: Typically $5,000 to $500,000 for trading businesses.
Read the lesson →
V
- Valuation Security
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A professional estimate of what a property is worth.
Why it matters: Needed for most property-secured loans.
W
- Working capital Money
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The cash available to run the business day to day.
Why it matters: Short-term gaps in working capital are what lines of credit are built for.
Read the lesson →
No match. Try a shorter word, or ask a real person; we're happy to explain.
Why a jargon buster?
Lending conversations are full of words that sound more complicated than they are. "LVR" is just how much you borrow compared with what a property is worth. "Serviceability" just means whether you can afford the repayments. "Security" is the lender's safety net. When the words stop being scary, the decisions get much easier.
This page is the companion to our Loans 101 lessons. Each term links to the lesson that explains it properly, with examples. If you'd like to see how ready your business is before you talk to anyone, try the loan-readiness quiz.
Five terms to learn first
- Security: what the lender can rely on if the loan isn't repaid. It's the difference between secured and unsecured loans.
- Total cost: everything you'll repay beyond the amount borrowed. The fairest way to compare offers.
- Term: how long you have to repay. Shorter usually means bigger repayments but less total cost.
- Personal guarantee: your promise to repay if the business can't. Read it carefully.
- Turnover: the money your business brings in. Unsecured loans are sized on it.
Still puzzled by something?
That's what real people are for. Our enquiry takes about a minute and involves no credit check. Your details go to one person, not a crowd of lenders, and they'll explain anything you're unsure of without making you feel silly for asking. Fill in the form accurately, and they'll explain your options in the same plain English you'll find on this page.
Frequently asked questions
Why does business lending use so much jargon?
Mostly habit. Many terms come from law and accounting, and people who use them every day forget they're not everyday words. Every one of them can be explained simply, which is what this page does.
What's the most important term for a first-time borrower?
Probably 'security', because it explains the difference between secured and unsecured loans, and 'total cost', because it's the fairest way to compare offers.
Can I ask about a term that isn't here?
Of course. When you enquire, a real person will explain anything in plain English. There's no such thing as a silly question.
Does this page give financial advice?
No. It explains general terms so you can follow a lending conversation. Your own situation is best discussed with a real person, and tax questions with your accountant or registered tax agent.
Words sorted. Now, what could you borrow?
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