The final part of this guide to business loans and finance raising covers ‘property development finance’ through to ‘yield’.Property development finance – Finance to cover site purchase and building costs designed to fund property development.Prospectus – A package of information prepared for provision to potentially interested investors in a flotation.Prudence – The accounting concept of recognising losses as soon as they can be identified, but profits only once they have been earned.Public limited company (PLC) – A company that meets statutory requirements about the level of its issued share capital and which may therefore be entitled to sell shares to the public (although not all PLCs are listed on a stock exchange).Quick ratio – See the definition of acid ratio in part 1 of this series.Ratchet – Arrangement for increasing management’s shareholding if business hits targets.Receivable – The US equivalent to the UK term debtor.Recourse – Arrangement where a factor or invoice discounter can recover any advance made to you in respect of any debt that is subsequently not recovered. A non-recourse arrangement provides you with protection against this.Regulated loan – A loan where a first charge is given on a domestic property or on a commercial property where over 40% of the area is used as your residence.Reserves (1) – A business’s retained earnings.Reserves (2) – Reduction of your availability applied by a factor or invoice discounter to cover any potential exposure (for example to supplier contras).Rolling bridges – The use of a series of bridging loans typically to fund a phased property development project.Sale and leaseback – A way of raising cash by selling an asset and then renting it back.Second round funding – Further equity investment into a business which has already had external equity investment (for example where a venture capitalist invests into a business which has had start up or seed money from a business angel, to enable it to take its products to market).Secondary buy out – Purchase of a VC’s stake by another VC.Section 320 – Provision in the Companies Act that prevents a director purchasing substantial assets (broadly anything worth more than £100,000 or 10% of the net assets of the company) without first obtaining the consent of the shareholders.Security (1) – A source from which a debt can be repaid if the borrower does not make repayments in the normal way, such as a charge over property or other assets.Security (2) – A document acknowledging that the holder has certain rights (such as repayment of a debt from the issuer).In the US can be extended to cover a share certificate.Self certification – The process whereby a borrower confirms that they are able to make repayments on a loan rather than proving it by providing accounts.Share capital – The capital contributed to a company by its shareholders.Shareholders funds – The total book value of a company (the net assets on its balance sheet) which is owned by shareholders.Small Firms Loan Guarantee – A scheme where the Government provides a partial guarantee to lenders for loans made to small businesses.Sole trader – An individual in business in their own name.Stapled finance – A package of potential borrowings pre-arranged for the buyer by the seller of a business.Statement of source and application of funds (SSAF) – Statement showing how profits generated by the business combine with investment in or realisation of assets, together with credit received or repaid, result in a movement in the businesses cash.Stock (1) – A company’s trading stock comprising raw materials, work in progress, and finished goods stock.Stock (2) – A company’s shares.Stock days – A measure of the time taken in converting goods purchased into sales.Stock exchange – A market in which shares and other securities can be traded.Structured loans – Loans from an asset based lender across more than one type of asset (eg factoring and a property loan).Sub prime – Borrowers with significant levels of adverse making them unattractive to mainstream lenders.Swing – Movement in a bank current account.Syndication – Situation where a number of funders join together to each fund a share of a project.Term loan – A loan repayable by an agreed level of installments over a period of years.Top up funding – Additional mezzanine or equity finance to cover the difference between total costs of a property development project and the sums available under normal property development finance.Trade finance – Specialist funding of trading transactions such as importing goods for resale.Transaction at an undervalue – Selling an asset at less than its fair value. In the event of an insolvency, a liquidator will review significant transactions preceding the insolvency and can act to set aside transactions at undervalue.VC – Venture Capital or Venture Capitalist.Veil of incorporation – The protection offered to shareholders by a company’s limited liability.Vendor finance – See deferred consideration.Venture capitalists (VC) – A firm set up to hold investors’ money and to invest it in high growth opportunities. Generally look to achieve a return of 30% per annum and hold investments for three to five years before selling. Generally tend not to be interested in deals below say, £0.5m investment.Whitewash report or agreement – Accountant’s report used to enable a business’s assets to be used as security on which to raise money to buy it.Work in progress – Goods which are in the process of manufacture but which are not yet finished, or work on a contract which is not yet complete.Working capital – A business’s current assets less its current liabilities.Working capital cycle – The concept that a business’s working capital turns over as it goes through its cycle of trade; suppliers providing goods which become stock and then debtors once sold, with the cash received from debtors then being used to pay suppliers.Yield – The amount of return received (E for earnings) for the price (P) paid. Usually shown as a percentage.We hope this short series has helped to de-mystify some of the jargon used in finance.