Plain English

Glossary

96 terms you will meet when raising money. On route pages, each term links here the first time it appears.

Accredited lender: A lender approved by the British Business Bank to offer finance under a government-backed scheme such as the Growth Guarantee Scheme.; Source: British Business Bank: Growth Guarantee Scheme FAQs
Admission document: The document a company publishes when joining AIM, describing the business and the shares.; Read about AIM (London Stock Exchange growth market)Source: London Stock Exchange: AIM Rules for Companies (August 2026)
Advance assurance: An early view from HMRC on whether your share issue is likely to qualify for SEIS or EIS.; Source: GOV.UK: Apply to use the Seed Enterprise Investment Scheme to raise money for your company
Angel syndicate: A group of angel investors who pool their money and experience to invest together.; Source: British Business Bank: Angel investors
Annual percentage rate (APR): The yearly cost of borrowing, including the lender's fees as well as interest. It is a useful way to compare loans. The higher the APR, the more you pay.; Source: British Business Bank: Business finance glossary; British Business Bank: What are the different types of business loan?
Anti-dilution provisions: Terms that protect an investor from having their stake diluted in future funding rounds.; Source: British Business Bank: What is a term sheet?
Arrangement fee: A fee charged by a lender or platform for setting up a loan or facility.; Source: British Business Bank: Business overdrafts
Balance sheet: A summary of what a company owns (assets), what it owes (liabilities) and its capital on a given date.; Source: British Business Bank: Business finance glossary
Balloon payment: A large final payment at the end of a finance agreement, used to keep the regular payments lower. It usually makes the total cost higher.; Source: British Business Bank: What is asset finance?
Bank of England base rate: The interest rate set by the Bank of England. It influences the rates on many loans and savings, and statutory late-payment interest is set at 8% above it.; Source: British Business Bank: Business finance glossary; GOV.UK: Charging interest on commercial debt
Cap table (share ownership table): A table showing who owns which shares in a company, and how that changes after an investment.; Source: British Business Bank: What is a term sheet?
Cash burn: How fast a company is spending money, usually measured per month.; Source: British Business Bank: What is venture debt?
Cash flow: The movement of money into and out of a business.; Source: British Business Bank: Business finance glossary
Cash flow forecast: A month-by-month estimate of the money you expect to come in and go out, used to show you can afford repayments.; Source: British Business Bank: Business finance glossary
Centralised exchange (CEX): A crypto trading platform run by a company that matches buyers and sellers and usually holds customers' assets. Running one will need FCA authorisation from 25 October 2027.; Read about Token offerings (ICO, IEO, IDO) and crypto exchangesSource: FCA: Cryptoassets (information for firms)
Charge: The security a company gives for a loan, such as a mortgage. Charges are registered at Companies House and should be registered within 21 days of being created.; Source: GOV.UK: Register a charge (mortgage) for a limited company
Claim notification: Telling HMRC in advance that you plan to claim R&D tax relief. First-time claimants may need to do this within 6 months of the end of the period of account.; Source: GOV.UK: Tell HMRC you want to claim R&D tax relief
Community benefit society: A society run for the benefit of the community rather than its members, which can raise money through community shares.; Source: Co-operatives UK: Community Shares Handbook 2.2.1 Withdrawable shares
Community Development Finance Institution (CDFI): A lender with a social purpose that supports businesses and people that banks often turn down.; Read about Community development finance (CDFI) loansSource: British Business Bank: Who qualifies for a loan from a CDFI?
Conversion discount: In a convertible loan note, a discount on the share price that note holders get when the loan converts.; Read about Convertible loan notes (CLNs)Source: British Business Bank: What are convertible loan notes?
Creditor: A person or business that your business owes money to, such as a lender or supplier.; Source: British Business Bank: Business finance glossary
Cryptoasset: A digital asset recorded on a blockchain, such as a coin or token. The FCA warns that cryptoassets are high risk and buyers should be prepared to lose all their money.; Source: FCA: Cryptoassets (consumer information)
Debenture: A document giving a lender a charge over a company's assets as security for a loan. It often includes both fixed and floating charges.; Source: HMRC Debt Management and Banking Manual DMBM655260: debentures held under fixed and floating charges
Debtor: A person or business that owes your business money.; Source: British Business Bank: Business finance glossary
Decentralised exchange (DEX): A crypto trading venue that runs on automated software (smart contracts), where users usually keep control of their own assets. Whether one falls within FCA rules depends on whether an identifiable person runs it as a business in the UK.; Read about Token offerings (ICO, IEO, IDO) and crypto exchangesSource: FCA: PS26/18 Cryptoasset perimeter guidance
Dilution: The fall in existing shareholders' percentage ownership when a company issues new shares.; Source: British Business Bank: What is a term sheet?; British Business Bank: What are convertible loan notes?
EBITDA: A measure of operating profit, before interest, tax, depreciation and amortisation are taken off.; Source: British Business Bank: Business finance glossary
Enhanced R&D intensive support (ERIS): Extra R&D tax relief for loss-making small and medium-sized companies that spend at least 30% of their costs on R&D.; Read about Research and development (R&D) tax reliefSource: GOV.UK: R&D tax relief: the merged scheme and enhanced R&D intensive support
Enterprise Investment Scheme (EIS): A tax relief scheme that gives investors 30% income tax relief for buying new shares in smaller, growing companies.; Source: GOV.UK: Apply to use the Enterprise Investment Scheme to raise money for your company; GOV.UK: Tax relief for investors using venture capital schemes
Equity: Ownership of a company, held as shares. Raising equity means selling part of the company.; Source: British Business Bank: Business finance glossary
Equity shares (commercial companies) (ESCC): The single FCA listing category for commercial companies since July 2024, which replaced the premium and standard segments.; Read about London Stock Exchange Main Market listingSource: FCA: PS24/6 Primary Markets Effectiveness Review: final UK Listing Rules
Exit: How investors sell their shares and get their money back, for example through a sale of the company or a stock market listing.; Source: British Business Bank: Venture capital; British Business Bank: Private equity
Exit (bridging loan): How you will repay a bridging loan, for example a mortgage or a sale. Lenders need to see a clear exit.; Read about Bridging loanSource: British Business Bank: What is a business bridging loan?
Factor rate: A number in decimal form used to set the total repayable on a merchant cash advance. The advance is multiplied by it.; Read about Merchant cash advanceSource: British Business Bank: Small business owners guide to a merchant cash advance
Factoring: Selling your unpaid invoices to a finance company, which pays you most of their value up front and collects payment from your customers.; Read about Invoice factoringSource: British Business Bank: Business finance glossary; British Business Bank: Working capital finance options
FCA Register: The FCA's public list of firms it authorises or registers. You can use it to check a lender, platform or exchange.; Source: FCA: Cryptoassets (information for firms)
Finance lease: Renting an asset for most of its life while paying off its cost plus interest. You insure and maintain it, but do not own it.; Read about Asset finance (hire purchase and leasing)Source: British Business Bank: What is asset finance?
Financial Conduct Authority (FCA): The UK regulator for financial services firms and markets. Many lenders, platforms and investment firms must be authorised by it.; Source: FCA: Crowdfunding
Financial Ombudsman Service (FOS): A free service that settles complaints between financial firms and their customers, including many small businesses.; Source: Financial Ombudsman Service (small business): Who we can help
Financial promotion: A communication that invites or encourages someone to invest. UK law restricts who can make them and what they must say.; Source: FCA: PS22/10 Strengthening our financial promotion rules for high-risk investments
Financial Services Compensation Scheme (FSCS): A scheme that can pay compensation if an authorised financial firm fails. Crowdfunding and crypto investments are generally not covered.; Source: FCA: Crowdfunding; FCA: Cryptoassets (consumer information)
Fixed charge: A charge over specific assets, such as property, plant or vehicles, that the company cannot sell without the lender's consent.; Source: HMRC Debt Management and Banking Manual DMBM655260: debentures held under fixed and floating charges
Floating charge: A charge over a group of assets that change in the normal course of business, such as stock. The company can keep trading them until the charge takes effect.; Source: HMRC Debt Management and Banking Manual DMBM655260: debentures held under fixed and floating charges
Free float: The share of a company's listed shares held by the public. Main Market companies must have at least 10%.; Source: FCA Handbook: UK Listing Rules sourcebook (UKLR)
Funding round (seed, Series A and later): A stage of raising equity. Pre-seed and seed come first, then Series A, B, C and so on, usually getting larger each time.; Source: British Business Bank: A guide to equity funding stages for your business; British Business Bank: Venture capital
Gross assets: The total value of everything a company owns, before taking off what it owes. SEIS and EIS set limits on it.; Source: GOV.UK: Apply to use the Seed Enterprise Investment Scheme to raise money for your company; GOV.UK: Apply to use the Enterprise Investment Scheme to raise money for your company
High net worth and sophisticated investors: Investors who meet tests of wealth or experience. Retail investors who do not are generally limited to putting 10% of their net assets into high-risk investments.; Source: FCA: PS22/10 Strengthening our financial promotion rules for high-risk investments
Hire purchase (HP): Paying for an asset in instalments. The finance provider owns it until the last payment, then it becomes yours.; Read about Asset finance (hire purchase and leasing)Source: British Business Bank: What is asset finance?
Initial public offering (IPO): The first time a company sells shares to the public on a stock market.; Source: British Business Bank: Venture capital
Insolvency: When a company cannot pay its debts, or owes more than it owns.; Source: British Business Bank: Business finance glossary
Invoice discounting: Borrowing against your unpaid invoices while you keep collecting payments yourself, usually without customers knowing.; Read about Invoice discountingSource: British Business Bank: Working capital finance options; UK Finance: Invoice finance and asset-based lending
Invoice finance: Borrowing against your unpaid invoices. The two main kinds are factoring and invoice discounting.; Source: British Business Bank: Working capital finance options; UK Finance: Invoice finance and asset-based lending
Lead angel: The angel who coordinates a syndicate's investment and usually works most closely with the company.; Source: British Business Bank: Angel investors
Leveraged buy-out: Buying a company using mostly borrowed money, often secured on the company being bought.; Source: British Business Bank: Private equity
Liquidation preference: A term that decides how money is shared out when a company is sold or wound up, often letting investors be paid first.; Source: British Business Bank: What is a term sheet?
Liquidity: How easily assets can be turned into cash.; Source: British Business Bank: Business finance glossary
Loan-to-value (LTV): The loan amount as a percentage of the value of the asset securing it. A lender might lend up to 50% of the value of stock, for example.; Source: British Business Bank: What is asset-based lending?
Longstop date: The latest date by which shares must be issued under an advance subscription agreement. For SEIS or EIS, HMRC generally expects no more than 6 months.; Read about Advance subscription agreement (ASA)Source: HMRC Venture Capital Schemes Manual VCM12025: EIS advance subscription agreements
Management buy-in (MBI): When an outside management team buys a business.; Read about Private equity (including buy-outs)Source: British Business Bank: Private equity
Management buy-out (MBO): When a company's existing managers buy the business, often with private equity backing.; Read about Private equity (including buy-outs)Source: British Business Bank: Private equity
Market capitalisation: The total value of a company's shares at the market price. Main Market listings need an expected market value of at least £30 million.; Source: FCA Handbook: UK Listing Rules sourcebook (UKLR)
Maturity date: The date when a convertible loan must convert into shares or be repaid with interest.; Source: British Business Bank: What are convertible loan notes?
Micro-enterprise: A very small business. For Financial Ombudsman complaints, one with fewer than 10 staff and turnover or balance sheet of no more than €2 million.; Source: Financial Ombudsman Service (small business): Who we can help
Nominated adviser (nomad): A firm approved by the London Stock Exchange that every AIM company must have. It assesses whether a company fits AIM and advises it on the rules.; Read about AIM (London Stock Exchange growth market)Source: London Stock Exchange: AIM Rules for Companies (August 2026)
Non-recourse (bad debt protection): An option in invoice finance where the provider takes on the risk of some customers not paying, usually for an extra cost.; Source: UK Finance: Invoice finance and asset-based lending
Operating lease: Renting an asset for a set period while the provider maintains it. You may be able to upgrade during the term.; Read about Asset finance (hire purchase and leasing)Source: British Business Bank: What is asset finance?
Option pool: Shares set aside so the company can give share options to staff and advisers, shown in the cap table as a percentage of all shares.; Source: British Business Bank: What is a cap table?; British Business Bank: What is a term sheet?
Personal guarantee (PG): A legally binding promise by a business owner or director to repay a business loan personally if the business cannot.; Source: British Business Bank: A guide to personal guarantees for business borrowing
Post-money valuation: What a company is valued at after new investment, equal to the pre-money valuation plus the amount invested.; Source: British Business Bank: What is a term sheet?
Pre-money valuation: What a company is valued at before new investment goes in.; Source: British Business Bank: What is a term sheet?
Prospectus: A detailed document a company must publish, under FCA rules, before its shares are admitted to a regulated market such as the Main Market.; Source: FCA: PS25/9 New rules for the public offers and admissions to trading regime
Public offer platform (POP): An FCA-authorised platform that companies must use, since 19 January 2026, for offers of £5 million or more to a broad range of investors outside public markets.; Source: FCA: FCA lowers costs for businesses raising capital in support of growth (15 July 2025); FCA: PS25/9 New rules for the public offers and admissions to trading regime
Qualifying cryptoasset disclosure document (QCDD): A disclosure document that must be published before a token is admitted to trading on a UK retail crypto platform, under rules that start on 25 October 2027.; Read about Token offerings (ICO, IEO, IDO) and crypto exchangesSource: FCA: PS26/9 Crypto regime: admissions and disclosures and market abuse
R&D expenditure credit (RDEC): The main R&D tax relief, worth 20% of qualifying R&D costs, for accounting periods starting on or after 1 April 2024.; Read about Research and development (R&D) tax reliefSource: GOV.UK: R&D tax relief: the merged scheme and enhanced R&D intensive support
Recourse: In invoice finance, the business stays responsible if a customer does not pay, and must repay the money advanced against that invoice.; Source: UK Finance: Invoice finance and asset-based lending
Repayable on demand: The lender can ask for the money back at any time, rather than on a fixed schedule. Many overdrafts work this way.; Source: British Business Bank: Business overdrafts
Revenue: Money received by, or owed to, a business for goods or services it has provided. "Pre-revenue" means not yet earning any.; Source: British Business Bank: Business finance glossary
Runway: How long a company can keep going on the cash it has, given how fast it is spending.; Source: British Business Bank: What is venture debt?
Sales ledger: Your record of the invoices you have sent to customers and the payments due. With factoring, the provider runs it for you.; Source: British Business Bank: Working capital finance options
Secured loan: A loan backed by an asset you own. If you do not repay, the lender can take and sell the asset.; Source: British Business Bank: What are the different types of business loan?
Security (collateral): Something valuable, such as property or equipment, that a lender can take and sell if a loan is not repaid.; Source: British Business Bank: Business finance glossary; British Business Bank: What are the different types of business loan?
Seed Enterprise Investment Scheme (SEIS): A tax relief scheme that gives investors 50% income tax relief for buying new shares in very young, small companies. A company can raise up to £250,000 through it.; Source: GOV.UK: Apply to use the Seed Enterprise Investment Scheme to raise money for your company; GOV.UK: Tax relief for investors using venture capital schemes
Small and medium-sized enterprise (SME): A smaller business. Definitions vary by scheme. The British Business Bank uses turnover of £25 million or less, fewer than 250 employees and gross assets under £12.5 million (two of the three).; Source: British Business Bank: Business finance glossary
Sponsor (listing): An FCA-approved adviser that a company must appoint when it applies to list on the Main Market.; Read about London Stock Exchange Main Market listingSource: FCA: PS24/6 Primary Markets Effectiveness Review: final UK Listing Rules; FCA Handbook: UK Listing Rules sourcebook (UKLR)
Statutory late-payment interest: Interest the law lets you charge another business that pays you late, at 8% plus the Bank of England base rate.; Read about Statutory late-payment interest and compensationSource: GOV.UK: Charging interest on commercial debt
Term loan: A set amount borrowed and repaid in regular instalments over an agreed period.; Read about Bank term loanSource: British Business Bank: What are the different types of business loan?
Term sheet: A short document setting out the main terms of an investment before the full legal agreements are drafted.; Source: British Business Bank: What is a term sheet?
Time to Pay: An HMRC payment plan that lets you pay an overdue tax bill in monthly instalments. Interest is charged.; Read about HMRC payment plan (Time to Pay)Source: GOV.UK: If you cannot pay your tax bill on time
Trigger event: The event, such as a new funding round, that turns a convertible loan into shares.; Read about Convertible loan notes (CLNs)Source: British Business Bank: What are convertible loan notes?
Turnover: The total sales of a business over a period.; Source: British Business Bank: Business finance glossary
UK Export Finance (UKEF): The UK government's export credit agency, which helps exporters get finance, for example by partly guaranteeing bank facilities.; Source: GOV.UK: General Export Facility
Unsecured loan: A loan with no asset put up as security. Lenders usually ask for a personal guarantee instead, and rates are usually higher.; Source: British Business Bank: What are the different types of business loan?
Valuation cap: In a convertible loan note, the highest company valuation used to convert the loan into shares.; Read about Convertible loan notes (CLNs)Source: British Business Bank: What are convertible loan notes?
Venture Capital Trust (VCT): A listed fund that pools investors' money and invests it in smaller UK businesses, with tax reliefs for investors.; Source: British Business Bank: Venture capital
Withdrawable shares: Shares in a co-operative or community benefit society that members can cash in under the society's rules but cannot sell to others. Each member can hold up to £100,000.; Read about Community sharesSource: Co-operatives UK: Community Shares Handbook 2.2.1 Withdrawable shares
Working capital: The money a business uses for day-to-day trading. It shows whether the business can pay its short-term bills.; Source: British Business Bank: Business finance glossary