Working definitions, borrower's-chair perspective. Cross-references point to the part that covers the term in anger.
Advance rate — % of eligible loan balance the lender funds; the rest is your first loss. Comes as a mechanism (tiers, gates, decay), not a number. (Part 5)
Amortization period — facility phase after the draw window: no new borrowing, collections repay the lender. (Part 2)
Backup servicer — pre-contracted replacement servicer receiving your data feeds continuously; steps in (and takes the fee) if you fail. Warm = synced and tested; cold = data escrow. (Part 2)
Bad-acts / "bad boy" guaranty — recourse triggered by fraud-type conduct (misappropriation, willful misconduct, voluntary bankruptcy) rather than credit losses. The floor of every recourse spectrum. (Part 5)
Bankruptcy-remote — structured so the SPV and its assets stay out of the parent's bankruptcy; maintained via separateness covenants, an independent director, and true-sale/non-consolidation opinions. (Part 2, 9)
Borrowing base — the collateral-derived cap on what you can have outstanding: eligible balances × advance rate (+ eligible cash) − concentration excesses. A deficiency must be cured fast — typically days. (Part 5)
Capacity rights — lender's right to finance a stated % of everything you originate. (Part 5)
Cash sweep / cash trap — trigger-activated waterfall flip sending up to 100% of collections to the lender until cured or repaid. (Part 5)
Change of control — ownership/management change constituting default; watch key-person inclusion and the cap-table baseline set at closing. (Parts 5, 9)
Compliance certificate — periodic officer certification that covenants hold and reps remain true; each one re-makes your reps. (Part 10)
Concentration limits — caps on portfolio composition (obligor, industry, channel, geography, grade); excesses usually drop from the borrowing base. (Part 5)
Conditions precedent (CPs) — everything that must be true/delivered before closing or before each draw. (Part 9)
Covenant — an obligation that must hold continuously (minimum cash, no other debt, separateness…); breach is default. (Part 5)
Cross-default — default triggered by default elsewhere; fight the "whether or not exercised" drafting. (Part 5)
DACA (deposit account control agreement) — tri-party agreement giving the lender control rights over a bank account; "springing" versions activate on default. The closing long pole. (Parts 2, 9)
Day count (actual/360) — interest convention charging 365 days on a 360-day year; ~1.4% effective uplift. (Part 6)
Delayed-draw term loan — committed amount drawn over time where repaid principal typically cannot be re-borrowed. A bucket, not a pipe. (Part 2)
Draw period / window — months during which you can borrow. (Part 2)
Early amortization — trigger-driven early switch to repayment mode, usually with a cash sweep. (Part 5)
Eligibility criteria — the requirements a loan must meet to count toward the borrowing base; defines which part of your book the facility can see. (Parts 5, 8)
Event of default (EOD) — a condition letting the lender stop funding, apply default interest, and accelerate. (Part 5)
Excess spread — portfolio yield minus losses, fees, and interest cost; commonly a trigger metric. (Part 5)
First loss — the loss-absorbing slice you fund below the lender's advance; the structural reason lending startups raise big equity rounds. (Parts 1, 5)
Forward flow — you originate and sell loans (typically at par) to the buyer, keeping origination and servicing fees. (Part 2)
Key person event — named founder/executive departure triggering default or termination rights; negotiate a cure window. (Part 5)
LSA (loan and security agreement) — the definitive facility document; where everything "deferred to documentation" lands. (Part 8)
MAC (material adverse change) — subjective catch-all default; narrow it. (Part 5)
Make-whole — prepayment compensation approximating the lender's forgone interest. (Part 5)
No-call period — window in which prepayment is barred or penalized; watch clock resets on upsize/conversion. (Part 5)
Non-consolidation opinion — counsel's opinion that the SPV wouldn't be collapsed into a parent bankruptcy. (Part 9)
Perfection certificate — certified pre-closing questionnaire (names, accounts, liens, litigation…) that becomes representations; inaccuracy = default. (Part 9)
Ramp-up holiday — negotiated suspension of concentration/performance covenants until the book reaches critical mass. Ask for it by name. (Part 5)
Revolver — facility where repaid amounts restore availability for re-borrowing. Verify the mechanics; not everything labeled revolving revolves. (Part 2)
ROFO / ROFR — right of first offer (they bid first) / right of first refusal (they match your best competing offer — chills competition; the must-accept variant obligates you to take the match). (Part 5)
Servicer / servicing fee — the party managing the loans (usually you), paid ~1% annualized or a % of collections, ideally senior in the waterfall. (Part 2)
SOFR — the standard USD floating benchmark that facility pricing floats over. (Part 5)
SPV / SPE — special purpose vehicle holding the loans and accounts, insulated from the parent. (Part 2)
Static pool / vintage analysis — cohort-based performance tracking (loans grouped by origination period, followed over life); the core underwriting artifact. (Part 3)
Structuring fee — upfront fee on the committed amount, often repeated per tranche. (Part 6)
True sale opinion — counsel's opinion that assets genuinely transferred to the SPV and can't be clawed back into the parent's estate. (Part 9)
UCC-1 — public financing statement perfecting a security interest against a debtor's exact legal name. (Part 9)
Unused / undrawn fee — annual charge on committed-but-undrawn capital; the oversizing tax. (Part 6)
Verification agent — third party re-checking tapes, borrowing-base math, and collections against reports. (Part 2)
Warehouse facility — revolving-style borrowing against loans you originate and hold; the on-ramp to securitization. (Part 2)
Warrant (penny warrant) — equity purchase right granted to the lender; penny strike ≈ outright grant. Watch rider rights and loan-document status. (Part 5)
Waterfall — the fixed distribution order of collected cash: fees → servicing → interest → principal → you. Read it slowly; it's your actual cash flow. (Part 5)