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BUSINESS FINANCING GLOSSARY

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization — a proxy for operating cash flow used to value businesses and gauge debt capacity.

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Related terms

Letter of Intent (LOI)→A non-binding outline of the key terms two parties intend to agree to — common in business acquisitions before a definitive purchase agreement.Mezzanine Financing→A hybrid of debt and equity that sits between senior loans and ownership in the capital stack. Used for growth or buyouts; lenders may take a small equity kicker.Amortization→The schedule by which a loan is paid down over time. Each payment covers interest plus a slice of principal, so the balance falls to zero by the maturity date.

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