Definition

Temporarily acquiring someone else's money with a solemn promise to give it back (eventually, maybe). Banks love it because interest exists.

Example Usage

The startup was borrowing aggressively to fund expansion, a strategy that either leads to unicorn status or spectacular bankruptcy.

Source: Common financial terminology, Investopedia

Related Terms

Advanced

waterfall distribution

The predetermined order in which cash flows are distributed among different classes of investors, with senior investors getting paid before junior ones. It's like a literal waterfall—money flows down until each tier is satisfied.

💰 Finance / Accounting
Intermediate

Valuation

The estimated worth of a company, a number that ranges from scientifically calculated to completely made up depending on who's doing the estimating. Startup valuations in particular are an art form, where a company with no revenue and an idea on a napkin can be worth a billion dollars if the napkin is impressive enough.

💰 Finance / Accounting🚀 Startup / VC
Beginner

accrued expenses

Costs incurred but not yet paid, recorded as liabilities on the balance sheet because accrual accounting insists on acknowledging unpleasant realities before the bills arrive. Financial statements' way of saying 'don't get too excited, you owe money.'

💰 Finance / Accounting
Intermediate

accrual accounting

An accounting method that records revenues and expenses when they're earned or incurred, not when cash actually changes hands. It's the difference between promising to pay someone and actually opening your wallet.

💰 Finance / Accounting
Beginner

creditor

The person or institution you owe money to, who will periodically remind you of this fact with varying degrees of politeness. In the great financial food chain, creditors sit above debtors and pray they'll actually get paid back. They range from your friendly neighborhood bank to that guy you borrowed twenty bucks from in college and somehow never repaid.

💰 Finance / Accounting
Intermediate

Cryptocurrency

Digital money that exists solely on computers, consumes more electricity than some countries, and can lose 40% of its value because a billionaire tweeted a dog meme. It was invented to replace traditional banking and has instead created an entirely new way to lose your life savings.

💰 Finance / Accounting

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