amortization, Every month, a slightly smaller portion of the payment goes to interest, and a slightly larger portion goes to principal., amortization schedule, Before signing, the company's accountant asks the bank for the exact table showing how much of each of the next 60 payments will go toward interest versus principal., balloon payment, The monthly payments look low and manageable, but the agreement has a $50,000 payment due in one lump sum in the final month., bridge loan, A client is waiting six weeks for a big invoice to be paid but needs cash right now to cover payroll. The bank offers short-term financing to cover the gap., prepayment penalty, A company wants to pay off its loan two years early because rates have dropped, but the bank charges an extra fee for doing so., underwriting, A loan application has been submitted, and the bank's risk team is now reviewing the company's financials to decide whether to approve it, LTV, A property is worth $500,000, and the bank agrees to lend $350,000 against it., DTI, A borrower's monthly debt payments equal 42% of their monthly income, which makes the bank hesitant to approve the loan, covenant, The loan agreement says the company cannot take on any new debt above $100,000 without the bank's written approval, to breach a covenant, The company signed an agreement promising not to pay dividends while the loan is outstanding — but then pays dividends anyway.

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