Tag Archives: bank jargon

Business Law Services Alert: Demystifying bank jargon

You need a new C&I loan. Your bridge loan is about to mature. Do you want interest based on LIBOR? Do you need to put a collar on the interest rate? The bank is not willing to provide an “air ball” given the current state of the economy. The banker says that to get a loan approved, it will need to be an ABL with a borrowing base and many financial covenants. How’s your EBITDA? What’s your current DSCR? Are you confused, or just overwhelmed?

Just like many other professions, the world of banking is filled with abbreviations, slang and jargon. Understanding banking terminology is key to managing your financial relationships and to understanding your loan documents. Your failure to have at least a rudamentary understanding of these words can restrict your ability to effectively communicate with bankers and might make it hard for you to understand exactly what is being offered to you by your bank or a potential lender.

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