What is

Loan-to-Value (LTV) Ratio: What It Is & How to Calculate It

The loan-to-value (LTV) ratio compares your loan amount against the value of the collateral it is being secured by. Lenders use this to determine your loan eligibility and the specific rates and terms you’ll get.

By Andrew Wan July 30, 2024 | Business Financing, What is

The LTV ratio is a common requirement for secured loans, such as real estate, equipment financing, and vehicle loans. A good LTV ratio is usually 80% or less. However, the requirements can vary depending on the specific type of loan you’re applying for, the lender you choose, and the strength of your credit and finances….

What Is a Business Credit Score? A Beginner’s Guide

By Lauren McKinley July 30, 2024 | Financing, What is

A business credit score is a number provided by a credit bureau that represents the creditworthiness of a business. It is calculated based on a variety of factors that influence the score—including financial history, business characteristics, and legal implications. It’s a valuable tool that can be used to determine the level of risk a business…

What Is a General Ledger? How It Works & Example

By Danielle Bauter July 29, 2024 | Accounting, What is

A general ledger, or GL, is essentially the backbone of a company’s financial record-keeping system. It functions as a centralized repository that tracks all of a company’s transactions over time, organized by specific accounts. These accounts are categorized as assets, liabilities, equity, revenue, and expenses. The GL supports the double-entry accounting system, where each transaction…

A Simple Explanation of Section 1231 Property & Its Taxation

By Tim Yoder, Ph.D., CPA July 29, 2024 | Taxes, What is

Editor’s Note: This article focuses on the big-picture 1231 issues. It excludes details and exceptions that rarely make a difference and only serve to overly complicate things. It is intended for small business owners trying to understand how the tax is calculated on their asset sales, so if you’re a tax pro researching the nuances…

What Is a Blanket Mortgage? A Beginner’s Guide

By Lauren McKinley July 26, 2024 | Business Financing, What is

A blanket mortgage (or blanket loan) allows a borrower to finance multiple properties under one financial agreement. It streamlines the lending process and saves time and money by cutting down on paperwork and various fees associated with applying for several individual mortgages. Seasoned real estate investors use it to manage both commercial and residential properties…

The Accounting Equation: What It Is & The Effects of Common Transactions

By Eric Gerard Ruiz, CPA July 26, 2024 | Accounting, What is

The accounting equation is the fundamental formula in accounting—showing that assets are equal to liabilities plus owner’s equity. It’s the reason why modern-day accounting uses double-entry bookkeeping as transactions usually affect both sides of the equation. The accounting equation is an accounting fundamental that bookkeepers need to master to be proficient. We express the accounting…

What SBA Economic Injury Disaster Loans Are & How They Work

By Andrew Wan July 25, 2024 | Financing, What is

SBA economic injury disaster loans (EIDLs) are designed to provide funding to businesses that have suffered substantial economic injury as a result of a natural disaster. Funds can be used to cover ordinary and reasonable expenses to help the business survive until normal operations can be resumed. EIDLs are, however, only available to businesses that…

Current Ratio: What It Is & How It Works [+ Calculator]

By Lauren McKinley July 25, 2024 | Financing, Free Resources, What is

The current ratio, also commonly referred to as the working capital ratio, evaluates whether a company can cover its current liabilities with its current assets. The current ratio formula divides a company’s current assets by its current liabilities. It’s a useful calculation that can be used to determine if a company can pay its short-term…