A business loan agreement has many elements that outline the various terms and conditions associated with getting a loan — including the loan amount, the interest rate, the repayment schedule, penalties, covenants, and dates. Understanding each of these can help you outline the terms and conditions of your transaction and supply you with the knowledge…
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What Are Retained Earnings in Accounting & How To Calculate?
Retained earnings (RE) are the total profits a company has kept over time instead of paying them out to shareholders. These funds are either reinvested in the business or reserved for future needs. RE are commonly associated with businesses structured as corporations or LLCs, whereas sole proprietorships and partnerships generally do not maintain a retained…
Business Credit Report: What It Is & How To Read It
A business credit report is a snapshot of a company’s financial health. It shows details about the company’s debt and how it handled debt payments in the past. It is broken into various sections, each showing different information for company liens, outstanding loans, derogatory payment information, and recent credit applications. Lenders and investors often use…
What Is an Applicable Federal Rate (AFR)?
An applicable federal rate, also commonly known as an “AFR,” is the minimum interest rate required of a private loan. It is enforced and designated by the IRS and applies to loans with an interest rate lower than the tax rate if the loan is considered income. There are differing AFRs assigned to various loan…
Prepayment Penalty: What It Is & How It Affects Your Loan
A prepayment penalty is a fee that a lender can charge if you pay off or pay down a loan by a certain amount before a specified date. In order for a lender to charge a prepayment penalty, it must be disclosed upfront in its loan agreement. It must also specify the specific conditions in…
What is Reasonable Accommodation in the Workplace?
Reasonable accommodations are adjustments to working conditions that allow disabled workers to perform their jobs. Read on to understand your responsibilities as an employer.
What Is A Reasonable Accommodation? A reasonable accommodation is any workplace adjustment or modification that allows an employee with a disability equal opportunity in recruitment, hiring, compensation, benefits, training, job changes, and separation. Reasonable accommodations are a significant aspect of the Americans with Disabilities Act (ADA), a federal law prohibiting discrimination against employees with disabilities….
What is Asset-Based Lending: Financing with Collateral
Asset-based lending is a method in which a business borrows money by using its assets as collateral for a loan. By pledging collateral in exchange for a loan, it gives the lender the right to take possession of its assets in the event of a default. Assets can commonly include things like vehicles, machinery, equipment,…
What Is a Personal Holding Company (PHC)?
A personal holding company (PHC) is closely held C corporation (C-corp), where at least 60% of its income is from passive investments like stocks, bonds, and rental activities. A company may be classified as a PHC when cash generated from the sale of business assets is not distributed to shareholders in an attempt to avoid…