Small Business Encyclopedia
Startup Financing

401(k)

A retirement plan for employees that allows them to put part oftheir pre-tax salary in an account. The funds may not be withdrawnuntil employees retire without paying a penalty.

7(a) Loan Guaranty Program

The most basic and most popular of the SBA's loan programs. Its name comes from section 7(a) of the Small Business Act, which authorizes the agency to provide business loans to American small businesses.

Compound Interest

Interest computed on the sum of the principle and the accrued interest

Equipment Leasing

Obtaining the use of machinery, vehicles or other equipment on a rental basis. This avoids the need to invest capital in equipment. Ownership rests in the hands of the financial institution or leasing company, while the business has the actual use of it.

LowDoc

A special SBA 7(a) loan promising quick processing for amounts less than $150,000

Trade Credit

An arrangement to buy goods or services on account, that is, without making immediate cash payment

Short-Term Loans

A loan scheduled to be repaid in less than a year

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