Glossary

What is a line of credit?

A line of credit is funding that a borrower can access to use to fit their needs. Borrowers do not have to make any repayments of the principal or pay any fees until they draw down on the line of credit.

What is an unsecured loan?

Unsecured loans don’t require borrowers to provide collateral or security to the lender. As a result, unsecured loans may often be more convenient or accessible than secured business loans.

What are establishment fees?

Establishment fees are charges the borrower incurs when he or she takes out a loan. It is usually charged when the amount of the loan is transferred to the borrower’s bank account. Kikka Capital does not charge establishment fees, or early repayment or account management fees.

What does it mean to draw down?

When the borrower draws down on an approved line of credit, they are accessing or using the approved funding. With Kikka, you only pay a fee on what you draw down, not the full line of credit you’ve been approved for.

What is a loan term?

A loan term is the set period agreed to for the repayment of a loan. A small business loan is expected to be repaid by the end of the loan term.

What is principal?

Principal is the amount borrowed. Borrowers pay interest based on the amount of principal. At Kikka, the principal is the value of what you draw down from your unsecured line of credit. That means you only pay a fee on what you draw down, or use, not the entire amount of your approved line of credit.

What is capital?

Capital is cash or other assets that a business uses to provide their product or service. Capital can be used to invest in long-term assets such as machinery or equipment or for day to day business expenses With a Kikka line of credit, the cash you get can be used for any business purpose you like.

What is working capital?

Working capital is made up of cash and short-term assets and liabilities of the business. Working capital assets are readily converted to cash.

What is collateral?

Collateral, also known as security, is cash or another asset such as property or equipment that borrowers supply to lenders to secure a loan. In the event a borrower is unable to repay the loan, the lender takes possession of the collateral. Kikka doesn’t require you to provide collateral or security to access a business line of credit.

What is a lien?

A lien is an action a lender takes to obtain possession of property if a borrower is unable to repay their loan. A lien is often used when property is used as collateral for a business loan. Kikka doesn’t require security to access a line of credit.

What is a secured loan?

A secured loan is a loan that requires the borrower to provide collateral or security in the form of an asset. This asset may be cash, property or another item of value, kept by the lender if the borrower is unable to repay the loan.

What does it mean to refinance?

If you refinance, you apply for another source of funding. This can come in several forms, including a loan or a line of credit.

What is a fixed interest rate?

A fixed interest rate is an interest rate that does not fluctuate. A fixed interest rate gives borrowers certainty of the value of their repayments over the term of the loan.

What is a variable rate?

A variable rate is an interest rate that changes based on the movement of market interest rates. A variable rate effects how much interest a borrower pays on his or her small business loan.

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