Glossary

A commercial bank is a financial institution that provides various services, such as accepting deposits and issuing loans.

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.

Refers to a standard of reasonableness defined by what a similar person would do as judged by the standards of the applicable business community.

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.

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. 

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.

Comparable Store Sales are the amount of sales generated in a specified accounting period compared to amount of sales generated in a similar accounting period in the past.

A Compensating Balance is a minimum account balance that a borrower agrees must be maintained with a lender. This allows a bank the freedom to loan the Compensating Balance to other borrowers and profit from the difference between the interest rates.