CANCELED LOAN The annulment or recission of an approved loan prior to disbursement.

CAPACITY TO REPAY The determination made by a lender on whether a borrower can repay a loan after examining financial statements, financial ratios and operating data.

CAPITAL 1. Assets less liabilities, representing the ownership interest in a business; 2. A stock of accumulated goods, especially at a specified time and in contrast to income received during a specified time period; 3. Accumulated goods devoted to the production of goods; 4. Accumulated possessions calculated to bring income.

CAPITAL EXPENDITURES Business spending on additional plant equipment.

CAPITALIZATION The basic resources of a company including the owner’s equity, retained earnings and fixed assets. One of the “Five C’s” of Credit.

CAPITALIZED PROPERTY Personal property of the business which has an average dollar value of $300.00 or more and a life expectancy of one year or more. Capitalized property shall be depreciated annually over the expected useful life to the agency.

CARRYING COSTS Inventory costs associated with capital, storage, handling expenses, insurance, taxes and obsolescence.

CASH CONVERSION CYCLE The length of time between the payment of payables and the collection of receivables.

CASH DISCOUNT An incentive offered by the seller to encourage the buyer to pay within a stipulated time. For example, if the terms are 2/10/N 30, the buyer may deduct 2 percent from the amount of the invoice (if paid within 10 days) otherwise, the full amount is due in 30 days.

CASH FLOW The movement of money into and out of your business.

CASH FLOW STATEMENT An accounting presentation showing how much of the cash generated by the business remains after both expenses (including interest) and principal repayment on financing are paid. A projected cash flow statement indicates whether the business will have cash to pay its expenses, loans, and make a profit. Cash flows can be calculated for any given period of time, normally done on a monthly basis. Also, one of the Five “Cs” evaluated in determining a loan applicant’s credit-worthiness.

CAWBO – Contract Assistance for Women Business Owners The Office of Federal Contract Assistance for Women Business Owners (CAWBO) was established October 1, 2000, in the Office of Government Contracting at the U.S. Small Business Administration. The purpose of the office is to increase federal contracting opportunities for women-owned small business (WOSB) and to increase the number of WOSB that successfully compete in the federal marketplace.

CENTRAL CONTRACT REGISTRATION – CCR A data base of all businesses contracting or seeking contracts with the federal government. It is maintained by the U.S. Department of Defense.

CERTIFICATE OF COMPETENCY – COC A certificate issued by the Small Business Administration (SBA) stating that the holder is “responsible” (in terms of capability, competency, capacity, credit, integrity, perseverance, and tenacity) for the purpose of receiving and performing a specific government contract.

CERTIFICATE OF DEPOSIT Short-term instruments issued by commercial banks.

CERTIFIED DEVELOPMENT COMPANY – CDC A Certified Development Company (CDC) is a nonprofit corporation set up to contribute to the economic development of its community. The 504 Certified Development Company Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. CDCs work with the U.S. Small Business Administration (SBA) and private-sector lenders to provide financing to small businesses. There are about 270 CDCs nationwide. Each CDC covers a specific geographic area.

CERTIFIED LENDER PROGRAM – CLP The most active and expert lenders qualify for the U.S. Small Business Administration’s (SBA) streamlined lending programs. Under these programs, lenders are delegated partial or full authority to approve loans, which results in faster service from SBA. Certified lenders are those who have been heavily involved in regular SBA loan-guaranty processing and have met certain other criteria. They receive a partial delegation of authority and are given a three-day turnaround by the SBA on their applications (they may also use regular SBA loan processing). Certified lenders account for nearly a third of all SBA business loan guaranties.

CERTIFIED 8(a) FIRM A firm owned and operated by socially and economically disadvantaged individuals and eligible to receive federal contracts under the Small Business Administration’s 8(a) Business Development Program.

CHARACTER The degree to which a potential borrower feels a moral obligation to repay debts as evidenced by the borower’s credit and payment history. One of the “Five Cs” used in a lending officer’s determination of a particular loan applicant’s credit-worthiness.

CHARGE OFF An accounting transaction removing an uncollectible balance from the active receivable accounts.

CHARGED OFF LOAN An uncollectible loan for which the principal and accrued interest were removed from the receivable accounts.

COLLATERAL Something of value–securities, evidence of deposit or other property–pledged to support the repayment of an obligation. Also one of the Five “Cs” used in determining a loan applicant’s credit worthiness.

COLLATERAL DOCUMENT A legal document covering the item(s) pledged as collateral on a loan, i.e., note, mortgages, assignment, etc.

COMMERCE BUSINESS DAILY (CBD) The Commerce Business Daily lists notices of proposed government procurement actions, contract awards, sales of government property, and other procurement information. All federal procurement offices are required to announce, in the CDB, proposed procurement actions over $25,000 and contract awards over $25,000 that are likely to result in the award of any subcontracts. Prime contractors are also encouraged to publish subcontracting opportunities in the CBD.

COMMERCIAL PAPER Unsecured promissory notes of large corporations.

COMMUNITY ADJUSTMENT AND INVESTMENT PROGRAM (CAIP) The United States Community Adjustment and Investment Program was created to help communities that suffered job losses due to changing trade patterns with Mexico and Canada following the North American Free Trade Agreement (NAFTA). The CAIP promotes economic implementation of the adjustment by increasing the availability and flow of credit and encourages business development and expansion in impacted areas. Through the CAIP, credit is available to businesses in eligible communities to create new, sustainable jobs or to preserve existing jobs. The CAIP works with the U.S. Small Business Administration (SBA) in both their 7(a) Loan Guarantee Program and 504 Program to reduce borrower costs and increase the availability of these proven business assistance programs.

COMPROMISE The settlement of a claim resulting from a defaulted loan for less than the full amount due. Compromise settlement is a procedure available for use only in instances where the government cannot collect the full amount due within a reasonable time, by enforced collection proceedings or where the cost of such proceedings would not justify such effort.

CONDITIONS External factors such as government regulation, competition, industry trends, national economic trends, that can affect the success of a business. One of the “Five Cs” of credit.

CONSORTIUM A coalition of organizations, such as banks and corporations, set up to fund ventures requiring large capital resources.

CONTINGENT LIABILITY A potential obligation that may be incurred dependent upon the occurrence of a future event. Two examples are: (1) the liability of an endorser or guarantor of a note if the primary borrower fails to pay as agreed and (2) the liability that would be incurred if a pending lawsuit is resolved in the other party’s favor.

CONTRACT A mutually binding legal relationship obligating the seller to furnish supplies or services (including construction) and the buyer to pay for them.

CONTRACTING Purchasing, renting, leasing, or otherwise obtaining supplies or services from nonfederal sources. Contracting includes the description of supplies and services required, the selection and solicitation of sources, the preparation and award of contracts, and all phases of contract administration. It does not include grants or cooperative agreements.

CONTRACTING OFFICER A person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings.

CONTRACTOR TEAM ARRANGEMENT An arrangement in which (a) two or more companies form a partnership or joint venture to act as potential prime contractor; or (b) an agreement by a potential prime contractor with one or more other companies to have them act as its subcontractors under a specified government contract or acquisition program.

CLOSED LOAN Any loan for which funds have been disbursed, and all required documentation has been executed, received and reviewed. For statistical purposes, first or total disbursement is counted as a closed loan.

CLOSING Actions and procedures required to effect the documentation and disbursement of loan funds after the application has been approved, and the execution of all required documentation and its filing and recordation where required.

COLLECTION POLICY Actions a business takes to collect slow-paying accounts.

CONTINGENCY FUND Cash held for emergencies or unexpected outflows of funds. Also known as “Precautionary Balances.”

COPYRIGHT The legal right granted to authors, composers, artists and publishers to protect their thoughts and ideas for exclusive publication, reproduction, sale and distribution of their works.

CORPORATION A group of persons granted a state charter legally recognizing them as a separate entity having its own rights, privileges, and liabilities distinct from those of its members. The process of incorporating should be completed with the state’s secretary of state or state corporate counsel and usually requires the services of an attorney.

COSTS Money obligated for goods and services received during a given period of time, regardless of when ordered or whether paid for.

COVENANT A prescription for action in a loan document.

COVENANT NOT TO COMPETE The agreement by the seller of a business, not to enter into competition with the buyer of the business within a specific area for a specific period of time.

CREDIT Time allowed for the payment of goods or services sold on trust as well as confidence in the buyer’s ability and intention to fulfill their financial obligations.

CREDIT PERIOD Length of time allowed before the credit buyer must pay for credit purchases.

CREDIT POLICY Actions taken by a business to grant, monitor and collect the cash for outstanding accounts receivable.

CREDIT RATING A grade assigned to a business concern to denote the net worth and credit standing to which the concern is entitled in the opinion of the rating agency as a result of its investigation.

CUSTOMER TARGETING Identifying and marketing to those groups of customers most likely to buy a particular product or service, e.g., promoting boat products to boat owners.

CURRENT ASSETS Money, inventory and equipment that will be used up in the short term – usually within one year.

CURRENT RATIO The ratio of current assets to liabilities. Also called “quick ratio.”