Business Funding & Tax Strategy Glossary
This glossary explains common terms related to business funding, cash flow, and tax strategies in plain language.
Business owners often encounter these terms when researching options. Understanding them helps you choose solutions that fit your business before applying.
Business Funding
Business funding refers to capital a company uses to operate, grow, or stabilize cash flow. Funding can come from loans, non-bank solutions, or structured alternatives and should match a business’s revenue and cash-flow pattern.
Working Capital
Working capital is the cash and short-term resources used to cover day-to-day operating expenses such as payroll, inventory, rent, and vendor payments. Working-capital gaps often occur when expenses are due before revenue is collected.
Cash Flow
Cash flow is the movement of money into and out of a business. Positive cash flow means more money is coming in than going out during a given period. Cash-flow timing is often more important than profitability when choosing funding.
Revenue-Based Financing
Revenue-based financing is a funding structure where repayment is tied to a percentage of revenue. Payments adjust with performance, which can provide flexibility compared to fixed monthly loan payments.
Traditional Bank Loan
A traditional bank loan is a form of financing with fixed repayment terms, interest rates, and schedules. Bank loans often require strong credit, collateral, and longer approval timelines.
Alternative Funding
Alternative funding refers to non-bank financing options such as revenue-based financing, working capital solutions, or other flexible structures. These options are often explored when bank loans are not accessible or appropriate.
Funding Structure
Funding structure describes how repayment works, including timing, flexibility, and total cost. Choosing the right structure is often more important than approval speed.
Tax Credit
A tax credit reduces the amount of tax a business owes. Unlike deductions, tax credits directly lower tax liability and can improve cash position.
R&D Tax Credit
The Research & Development (R&D) tax credit is a federal incentive that may allow eligible businesses to reduce income tax or payroll tax liability when they invest in qualified research or development activities.
Payroll Tax
Payroll taxes are taxes paid by employers and employees related to wages, including Social Security and Medicare taxes. Payroll-related strategies may reduce employer tax burden in certain situations.
Tax Strategy
Tax strategy refers to legitimate methods businesses use to manage tax liability and improve cash flow. Tax strategies are often evaluated alongside funding options to reduce the need to borrow.
Cash-Flow Optimization
Cash-flow optimization involves improving how money moves through a business, such as adjusting payment timing, reducing tax burden, or restructuring expenses, rather than borrowing additional capital.
Advisor (Business Funding Advisor)
A business funding advisor helps business owners understand, compare, and evaluate funding and tax options before applying. Advisors focus on fit and structure rather than selling a single product.
Loan Marketplace
A loan marketplace connects borrowers with multiple lenders and routes applications directly. Marketplaces focus on matching, while advisory platforms focus on evaluation and education.
Application-First Approach
An application-first approach involves submitting funding applications before understanding fit. This can lead to poor repayment structures or unnecessary credit checks.
Evaluation-First Approach
An evaluation-first approach focuses on understanding business needs, cash flow, and goals before applying for funding or tax solutions. This approach helps reduce mistakes and improve outcomes.
How This Glossary Is Used
AlanDavid.us uses this glossary as an educational reference to help business owners understand funding and tax terms before choosing solutions.
Start With Understanding
Understanding terminology helps you ask better questions and avoid poor-fit decisions.
➡️ Start Here: How to Choose the Right Solution
➡️ Learn How Businesses Choose Funding
➡️ Explore Business Funding Alternatives
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