In This Section
Commitment Letter 
A letter by which a lender commits to provide a loan or other extension of credit to a prospective borrower. The commitment letter typically outlines the key terms of the credit facility and the conditions precedent that must be satisfied by the borrower prior to the funding of the loan.
Commitment Fee
A fee charged by a lender for its commitment to make a loan to a prospective borrower -- usually, subject to the prospective borrower's satisfaction of certain conditions set forth in the commitment letter or financing agreement.
Commitment
A lender's promise to a borrower to provide a loan or other extension of credit in a specified amount -- usually, at a certain interest rate, during a certain period and for a certain purpose. Commitments, along with the underlying basic terms of the credit offer, are generally memorialized in a commitment letter.
Commercially Reasonable
Refers to a standard of reasonableness defined by what a similar person would do as judged by the standards of the applicable business community.
Commercial Paper
An unsecured debt instrument issued by a company to finance its short-term liabilities (e.g., accounts receivable, inventory). A commercial paper's maturity rarely extends beyond 270 days, which allows the issuing company to avoid registering the instrument with the SEC.
Commercial Bank
A commercial bank is a financial institution that provides various services, such as accepting deposits and issuing loans.
Collection Days
Period of time that it takes for a business to receive payments owed in terms of accounts receivable.
Collateralized Debt Obligation (CDO)
A structured financial product that pools together cash flow-generating assets (mortgages, bonds, and loans) and repackages the asset pool in to tranches that can be sold to investors. The tranches in a CDO very in their risk profile based on priority on collateral in the event of default.
Collateral Reserve
A portion of the collateral value allocated to an availability block or availability reserve under the revolving line of credit to protect against decreases in asset values.
Collateral Quality Rating
A rating metric (0 to 9) that quantifies loss upon default by considering collateral type and control, lien position, level of monitoring, value, and advance rates.
Collateral Monitoring
The continual process of verifying collateral over the tenure of a financing agreement to reduce credit risk.
Collateral Agent
The financial institution that holds the collateral on behalf of the lenders under a syndicated loan agreement as security for performance of the borrower's obligations under the loan agreement.
Collateral Access Agreement
An agreement in which a mortgagee or lessor of property where collateral is stored or located acknowledges the liens of the lender and permits reasonable access to the property and collateral based on negotiated terms and conditions.
Collateral
An asset pledged as security for repayment of a loan. The most common forms of collateral are cash, accounts receivable, inventory, machinery and equipment, and property. In traditional asset based lending, the value of pledged collateral will determine how much can be borrowed.
Co-Lender
A Co-Lender is a form of loan participation where two or more lenders are named as the secured party in a statement and the financing agreement. Each lender in the agreement is referred to as the Co-Lender.
Club Financing (Club Deal)
A group of lending institutions that work together to finance a single borrower.
Closing Fee
A fee due from the borrower to the lender for a completed lending transaction. The closing fee is typically based on a percentage of the total commitment provided. Additional fees often include field exams, legal, appraisals, etc.
Chattel Paper
A document such as a lease, chattel mortgage or conditional sales agreement, which is evidence of both a monetary obligation and a security interest in or a lease of specific goods.
Chattel Mortgage
A form of chattel paper by which a borrower (mortgager) gives a lender (mortgagee) a lien on a movable piece of personal property as security for payment on an obligation.
Chart of Accounts (COA)
A financial organizational tool that provides a complete listing of every account in an accounting system.