Specialty Finance — Glossary

Advance rate and reserve are the paired controls in asset-based lending and invoice factoring that determine how much cash a lender releases against pledged collateral and how much it holds back.

After-repair value is the estimated resale price of a property after completed renovations, used by hard money and bridge lenders to size loans and set exit strategy.

Distressed debt is the obligations of a borrower in or near default, traded at a discount to par by specialized brokers and funds seeking recovery value.

Invoice factoring lets a business sell its receivables to a factor at a discount for immediate cash, with the factor collecting from the debtor.

Liquidation value is the estimated cash amount recoverable from selling a company's assets in a forced sale, net of liens and transaction costs.

Litigation funding provides non-recourse capital to plaintiffs or law firms for pending claims, repaid only from case proceeds. How it works, pricing, and common mistakes.

Loan-to-value ratio measures the loan amount against the collateral's appraised value, governing how hard money and bridge lenders size risk and structure covenants.

The difference between recourse and non-recourse financing for invoice factoring firms: how the risk allocation works, what it costs, and when each structure applies.

A factor rate is a decimal multiplier used in merchant cash advances to determine total repayment. Learn how it differs from interest and how to calculate it.

A hard money loan is a short-term, asset-backed loan secured by real estate, priced by interest rate and points, not borrower creditworthiness.

A merchant cash advance purchases future receivables at a discount, repaid through daily or weekly splits. A working definition for MCA principals and brokers.

A non-recourse advance is capital provided against a specific claim or judgment where repayment depends solely on recovery, with no personal guarantee or recourse to the claimant's other assets.

A structured settlement pays a legal claimant through scheduled, tax-free periodic payments funded by an annuity, not a single lump sum.

A TRAC lease is a vehicle and equipment lease where the lessee guarantees a terminal residual value, shifting depreciation risk to the borrower while preserving the lessor's tax benefits.

Effective rate is the true percentage of payment volume a merchant pays in processing fees, including all interchange, assessments, and processor markups.