Confusion reigns and disaster threatens if you misunderstand your fellow paddlers when kayaking in 50o water.
Confusion reigns and disaster threatens if you misunderstand what ‘debt’ means to your lender.
We’ll start with the ‘debt’ glossary. If you are in the mood for some fun, keep reading for the ‘Landlovers versus Paddlers’ glossary at the end of this post.
Installment debt: Debt that is due in payments (often monthly) over a period of time.
Mezzanine debt: Think of the word ‘middle’ when you think of mezzanine debt. The ‘top’ level is bank debt. The ‘bottom’ level is owner financing or capital. The middle level is junior to typical bank financing, is riskier and therefore the interest rate is higher, and has an equity component. The mezzanine lenders typically target companies with a good track record and often work with developers. They may have good projected cashflow but not yet enough hard assets to interest a bank. Since they are in second position, in the recession mezzanine lenders have had a very tough time of it.
Nonrecourse debt: Debt where the lender can only look to the loan collateral in the event the borrower defaults on the loan.
Recourse debt: Debt for which the borrower is liable if the collateral is insufficient to retire the debt. In the event of default, the lender can look beyond the collateral pledged for the loan and hold the borrower accountable for the unpaid balance.
Secured debt: Debt in which the lender has rights to collateral should you default on the loan. Secured debt can be recourse or nonrecourse.
Senior debt: Debt that must be satisfied first. It is often from financial institutions, asset-based and for smaller businesses, also personally guaranteed by the owners.
Subordinated or Junior debt: Debt that is not in first position.
The more layers of protection the lender has, the less risk and the lower cost of the loan.
Landlovers vs Paddlers…glossary of terms
- Paddlers: How far the wind blows across the water. More fetch equals higher waves caused by the wind.
- Landlovers: What the dog does when you throw the ball.
- Paddlers: What you tie with a rope and how fast you are traveling in nautical miles/hour. Nautical miles are measured relative to the degrees of latitude on a chart (map).
- Landlovers: What you tie with a rope
- Paddlers: A stroke out further from the boat than usual, helpful in turning.
- Landlovers: A way of cleaning the kitchen floor.
- Paddlers: Incoming tide. (As opposed to the outgoing tide, called the Ebb Tide).
- Landlovers: When the river overflows its banks.
- Paddlers: Rescue techniques used when you capsize that bring you upright without getting out of the kayak.
- Landlovers: What you ate with Thanksgiving dinner