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Glossary of Business Terms

The following business glossary is a list of terminologies for businesses applying for grants.



Acquiring supplies or services by the federal government with money or assets through purchase or lease.

Business concerns, organizations, or individuals that are a subsidiary of or controlled by control another or that are controlled by a third party. Control may include shared management or ownership; common use of facilities, equipment, and employees; or family interest.


B/E (Business EIDL) Loan
A business loan that incorporates physical losses and economic injury for the same legal entity or individual.
Balance Sheet or Statement of Financial Position
Reports an organization's Assets, Liabilities and Equity (net worth) at a specific time. Assets = Liabilities + Equity.

Break-even Analysis

A break-even point analysis is used to determine the number of units or dollars of revenue needed to cover total costs - Fixed and Variable Costs. Cost is something that can be classified in several ways depending on its nature. One of the most popular methods is classification according to fixed costs and variable costs.


Capital Leases
are for the purchase of fixed assets (machinery/equipment) and these assets are shown on the company’s balance sheet and represent a fixed debt. If the lease is a capital lease, the debt should be shown as a Note Payable.

Certified 8(a) Firm
A firm owned and operated by socially and economically disadvantaged individuals and eligible to receive federal contracts under the Small Business Administration’s 8(a) Business Development Program.

A mutually binding legal relationship obligating the seller to furnish supplies or services (including construction) and the buyer to pay for them.

Assets pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default. The preferred collateral for an SBA disaster loan is real estate

Comparative Analysis
Is designed to point out significant trends that occur from year to year by using more than one set of financial statements of comparable dates and time periods. A comparative analysis allows you to arrive at a more complete evaluation of an applicant’s financial position.
Corporation (C-corp.)

The most common form of business organization, and one, which is chartered by a state and given many legal rights as an entity separate from its owners. Characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern.

Current Assets
A balance sheet item that equals the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that could be converted to cash in less than one year.
Current Liabilities
A balance sheet item, which equals the sum of all money owed by a company and due within one year.


Days Payable
A measure of the average time a company takes to pay vendors, equal to accounts payable divided by annual credit purchases times 365.
Days Receivable
A measure of the average time a company's customers take to pay for purchases, equal to accounts receivable divided by annual sales on credit times 365.
Doing Business As - generally a trade name such as “Libby’s Lawn Service” is used, instead of the legal name.

Defense Acquisition Regulatory Council (DARC)
Representatives from each Military Department, the Defense Logistics Agency, and the National Aeronautics and Space Administration and that is in charge of the Federal Acquisition Regulation (FAR) on a joint basis with the Civilian Agency Acquisition Council (CAAC).

Defense Contractor
Someone who enters into a contract with the United States for the production of material or for the performance of services for the national defense.

A non-cash operating expense that reduces the value of a tangible asset as a result of wear and tear, age, or obsolescence. Depreciation is recorded in the financial statements of an organization as a reduction in the carrying value of the asset in the balance sheet and as an expense in the income statement.
Duplicated Interest
The amount of interest expensed that is added back to cash flow to prevent understating CASAD.


Economic Injury Disaster Loan (EIDL)
a working capital loan that provides necessary operating funds to enable eligible businesses to overcome the financial impact of a declared disaster. Normally, This loan may not be used to purchase long-term assets.
Emerging Small Business
A small business concern whose size is no greater than 50 percent of the numerical size standard applicable to the Standard Industrial Classification code assigned to a contracting opportunity.

An accounting term used to describe the net investment of owners or stockholders in a business. Under the accounting equation, equity also represents the result of assets minus liabilities.

Extraordinary Items
Additional expenses that are not considered  “normal” operations and caused directly by the disaster.


Fair and Reasonable Price
A price that is fair to both parties, considering the agreed-upon conditions, promised quality, and timeliness of contract performance. "Fair and reasonable" price is subject to statutory and regulatory limitations.

Full and Open Competition
This refers to contract action. "Full and open" competition means that all responsible sources are permitted to compete.


Gross Profit (GP) Net Sales (NS). The measure of every sales dollar left after paying for the product; what percent of the sales dollar is left to cover operating costs and to create a profit.



Income Statement
Shows an organization's income and expenses. (similar to a Profit & Loss Statement)
Injury Analysis
Measures the effects of the disaster on the overall financial condition of the business.
Injury Period
The time period during which the business feels the adverse effects of the disaster.

Intermediary Organization
Organizations that play a fundamental role in encouraging, promoting, and facilitating business-to-business linkages and mentor-protégé partnerships. These can include both nonprofit and for-profit organizations: chambers of commerce; trade associations; local, civic, and community groups; state and local governments; academic institutions; and private corporations.


Joint Venture
A commercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities. It can be an agreement between a certified 8(a) firm and a mentor firm to perform a specific federal contract.



A financial obligation, debt, or claim. Liabilities are legally binding obligations that are payable to another person or entity. The settlement of liability can be accomplished through the transfer of money, goods, or services. 
A legal claim against an asset which is used to secure a loan and which must be paid when the property is sold. A lien is also the right to keep possession of property belonging to another person until a debt owed by that person is discharged.
Limited Liability Entities (company/partnership)
A limited liability company (LLC) is a business structure whereby the owners are not personally liable for the company's debts or liabilities. It provides business owners with the favorable liability protection of corporations with the informality and tax advantages available to partnerships. It is a pass-through entity, like a partnership where the taxable income or loss is reported on the tax returns of the owners.
Limited Partnership
A business organization with one or more general partners, who manage the business and assume legal debts and obligations, and one or more limited partners, who do not participate in day-to-day operations and are liable only to the extent of their investments.


Mission Statement

A mission statement is a statement that captures an organization’s purpose, customer orientation, and business philosophy.


Contracting through the use of either competitive or other-than-competitive proposals and discussions. Any contract awarded without using sealed bidding procedures is a negotiated contract.


Operating Leases
The operating lease is deducted from the company’s operating expenses. If the lease is an operating lease, then the amount is already accounted for in total expenses and should not be shown as a scheduled debt.


P&L (Profit and Loss Statement)
Measures Net Income or Loss over a defined period of time. In addition, having the simple formula of Revenues – Expenses = Net Income/Loss. A P&L statement is also considered as Income Statement or Statement of Earnings. 
A type of unincorporated business organization in which multiple individuals, called general partners, manage the business and are equally liable for its debts; other individuals called limited partners may invest but not be directly involved in management and are liable only to the extent of their investments.

A mutually beneficial business-to-business relationship based on trust and commitment and that enhances the capabilities of both parties.

Physical Loans
Funds to repair/replace disaster damaged or destroyed business assets such as real estate, inventory, machinery, and equipment.
Primary Activity
The major business activity of the single legal entity or affiliated group, which is their predominant field of operation. (Also known as the Main Activity)
the owner(s) of the Applicant Entity that has a controlling financial interest in the business. 
An estimate of future economic or financial performance. Generally presented in the form of a Profit and Loss StatementP&L.



Request for Proposal (RFP)
A document outlining a government agency’s requirements and the criteria for the evaluation of offers.


These are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. It's a form of corporation, allowed by the IRS for most companies with 35 or fewer shareholders, which enables the company to enjoy the benefits of incorporation but be taxed as if it were a partnership.

Schedule of Liabilities
A business debt schedule that lists all of the debts the business currently owes, including creditor name; original amount due; original due date; current balance; repayment status; maturity date; payment amount and frequency; and how debt is secured.

Small Business
A business smaller than a given size as measured by its employment, business receipts, or business assets.

Small Business Innovative Research (SBIR) Contract
A type of contract designed to foster technological innovation by small businesses with 500 or fewer employees. The SBIR contract program provides for a three-phased approach to research and development projects: technological feasibility and concept development; the primary research effort; and the conversion of the technology to a commercial application.

Small Disadvantaged Business Concern
A small business concern that is at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged. This can include a publicly owned business that has at least 51 percent of its stock unconditionally owned by one or more socially and economically disadvantaged individuals and whose management and daily business is controlled by one or more such individuals.

Sole Proprietor
An individual who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses.

Standard Industrial Classification (SIC) Code
A code representing a category within the Standard Industrial Classification System administered by the Statistical Policy Division of the U.S. Office of Management and Budget. The system was established to classify all industries in the US economy. A two-digit code designates each major industry group, which is coupled with a second two-digit code representing subcategories.

SAE (Stand Alone Economic Injury Disaster Loan)
provide necessary working capital to enable eligible businesses to overcome the financial impact of a declared disaster without providing assistance for physical disaster loss.

A contract between a prime contractor and a subcontractor to furnish supplies or services for the performance of a prime contract or subcontract.
A company for which a majority of the voting stock is owned by a holding company. For SBA’s purposes, a subsidiary is an affiliate; a company owned or controlled by the applicant business.



Underserved Population

People who genuinely lack access to arts programs, services, or resources for geographic, economic, cultural, social, physical, or other demonstrable reasons. The term "population" can refer to a group of people with common heritage, regardless of whether they live in the same area.



Working Capital (WC)
The amount of current assets that is left after an organization pays all current debts.








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