Capital Cohabitation Key Terms and Definitions

Financing Terms

Debt: An amount owed to a person or organization for funds borrowed. Debt can be represented by a loan note, bond, mortgage or other form stating repayment terms and, if applicable, interest requirements. These different forms all imply intent to pay back an amount owed by a specific date, which is set forth in the repayment terms.  A company uses various kinds of debt to finance its operations. Private debt comprises bank-loan type obligations, whether senior or mezzanine. Public debt is a general definition covering all financial instruments that are freely tradeable on a public exchange or over the counter, with few if any restrictions.

Syndicate: 1) Loan syndication is a risk management tool that allows the lead banks underwriting the debt to reduce their risk and free up lending capacity. A syndicated loan is a loan that is granted to companies that wish to borrow more money than any single lender is prepared to risk in a single loan, usually many millions of dollars. In such a case, a syndicate of banks can each agree to put forward a portion of the principal sum.  A banking syndicate is a group of investors, often a set of investment banks, who have come together in order to function as an underwriting group for a specific project. 2) A group of investors who act together when investing in a company.

Equity: At the start of a business, owners put some funding into the business to finance assets. Businesses can be considered to be, for accounting purposes, sums of liabilities and assets; after liabilities (eg. debts and other obligations) have been accounted for, the positive remainder is deemed the owner's interest in the business.  Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital employed) is this interest in remaining assets, spread among individual shareholders of common or preferred stock.

Grants: Grants are funds dispersed by one party (Grant Makers), often a Government Department, Corporation, Foundation or Trust, to a recipient, often (but not always) a non profit entity, educational institution or business. Such application processes, generally require some form of grant writing often referred to as either proposals or submissions. Most grants awarded by foundations and corporate giving programs can be categorized as one of two types:

·         General purpose or operating support grants: supports the general expenses of operating the organization, not restricted to a specific use

·         Program development or project support grants: given to support a specific, connected set of activities, with a beginning and an end, explicit objectives and a predetermined cost; there are many kinds of project grants including planning, seed money or start-up, management or technical assistance, facilities and equipment, endowment, program-related investments grants