A

Amortization

A schedule for loan repayment. These are usually created on a monthly or quarterly basis.

Annual Loan Constant

The ratio of Annual Debt Service to the original principal of the loan.

B

Balloon Loan

A loan that is repaid by a series of small repayments until the remaining balance is due in a single, large payment.

Beginning Rancher Programs

Technical and financial programs offered to individuals who have operated a ranch for 10 consecutive years or less.

Benefit Corporation (B-Corp)

The nonprofit B Lab certifies B-Corps to meet rigorous transparency, accountability, and social/environmental performance criteria.

Blanket Mortgage

A mortgage in which more than one parcel of land is used as the collateral for a single loan.

Blended Rate

The proportional average rate on multiple loans or securities issued by one entity.

Bonding Damage Payments

A security that guarantees the holder receive compensatory payments if the issuer fails to meet specific performance criteria.

Borrower

The person or company that receives money from a lender in exchange for a written promise to repay the loan amount. In the event that the loan is used for real estate purposes, the term “mortgagor” may mean "borrower" and the loan may include a registered lien on the property. If bonds are issued for the loan amount, the term “issuer” may be used to denote the borrower and a maturity date for full repayment will be designated.

Bridge Financing

A temporary loan used to fill a gap in financing between the availability of permanent funding (or take-out funds) and the immediate need to react quickly and fund the purchase of an asset.

C

Charitable Creditors

When one or more board of directors members or other individuals associated with an organization agree to make payments on behalf of the organization if it defaults.

Charitable Loan Guarantor

See “Charitable Creditors.”

Conservation Banking

Financing in which a property is managed for the protection of its natural resource value. These properties provide conservation credits to serve as offsets for other development projects.

Conservation Buyer

See "Conservation Donor."

Conservation Donor

A private group or individual who purchases a property and later donates a conservation easement or fee interest.

Conservation Easement

A legal agreement between a landowner and a qualified conservation organization that permanently restricts usage rights of the property. This may apply to real estate development, commercial and/or industrial uses.

Conservation Finance

The practice of raising and managing capital to support land, water, and natural resource conservation.

Conservation Investors

A subset of investors who make investments intended to generate financial returns while also generating a positive return on natural resources or ecosystems.

Conservation Real Estate Development

Development that is focused on the potential long-term environmental or ecosystem impacts of the land-use planning.

Corporate Social Responsibility (CSR)

A continuing business commitment to contribute to economic development while improving the quality of life of employees and increasing the well-being of larger communities and society.

Covenant Regarding Additional Indebtedness

A contractual limitation in a loan document that requires the amount or degree of additional loans that the borrower can assume.

CRT

(CRT) Carbon Reduction Ton

CWA

(CWA) Clean Water Act

D

Debt

(1) A financial obligation to another person or entity; (2) An obligation which is created by borrowing; or (3) The sum of all of the financial obligations of a person or entity.

Debt Coverage Ratio

(DCR) A ratio used to assess the ability of an asset to generate cash flow sufficient to repay its loan obligations.

Debt Financing

Funds that support the purchase of an asset with credit.

Debt Ratio

A ratio used to assess a borrower's ability to repay a loan and their capacity for overall borrowing.

Debt Service

The mandatory cash repayment during a given period of time.

Debt-to-Equity Ratio

A proportion of the amount owed to the lender(s) of an asset to the equity. The equity is the value of the asset minus the amount owed.

Debt-to-Income Ratio

See “Debt Ratio.”

Deed of Trust

A mortgage in which a trustee or third party holds the legal title to the property to secure repayment.

Deposit

See "Earnest Money."  

Dry Mortgage

See “Nonrecourse Loan.”

Due Date

The deadline for the final loan payment.

E

Early Payment Penalty

See "Payment Penalty."

Earnest Money

A sum of money paid by a potential purchaser as proof of her intention to complete the purchase transaction. This money is held until the completion of a transaction but may be forfeited if the purchaser fails to complete the transaction.

Ecosystem Services

The sum of value provided to people from the ecosystem and ecosystem structure. More recently, this definition has also included the ability of an ecosystem to provide goods and services, which has been assigned economic value to help in decision-making processes.

Escrow

Payments that occur when consideration, benefits, legal rights, money, documents, or other valuables are transferred to another party in advance of that party’s legal ownership of them. This takes place on the basis that the legal ownership will occur at a point in the future. For example, an escrow agent holds money or assets “in escrow” until such a time when all conditions of an agreement are met to rightfully transfer ownership or title from one party to another.

Escrow Closing

The completion of a transaction to allow the release of money or other consideration held in escrow.

F

First Mortgage

The mortgage with the highest-priority claim to a piece of property.

Floating Rate

Rates that occur when a loan’s rate of interest owed is variable according to a specified index, agreed-upon benchmark rate, or national prime rate. The loan rate is said to "float" on top of the specified index by a set amount. For example, the loan may be set at Prime Rate plus 2% - meaning that if the Prime Rate is 6%, the loan interest rate will equal 8%.

Foreclosure

A legal process by which an asset’s sale is forced in order to repay the balance on a non-performing loan owed to specific lenders who are holding that asset as collateral.

G

Gap Financing

See “Bridge Financing”

Good Faith Money

See “Deposit."

Greenhouse Gas

(GHG) Greenhouse Gas

I

Impact Investing

Investments that combine financial returns with social and/or environmental benefits.

Installment Sale

A tax-motivated mechanism that spreads the income from a sale over several years, thereby helping to reduce the capital-gains tax.

Interest Payment

The portion of each periodic payment on a loan, expressed in dollars, which is allocated toward interest owed.

Interest Rate

The percentage of the borrowed amount that is charged by a lender on borrowed funds.

Interest-Only Loan

A debt for which the periodic payments are enough to pay only the interest, which accumulates on the principal over the payment period. Principal is due at maturity.

Interim Financing

See "Bridge Financing."

L

Land Banking

County or municipal quasi-governmental entities that are established to aggregate, manage and repurpose underused, undermanaged, abandoned or foreclosed land parcels.

Lease Back

A transfer of property that includes a right to lease by the former owner.

Letter of Credit

An agreement between a bank and a buyer created for the purpose of guaranteeing a seller receipt of funds on time and in full. If the buyer itself be unable to fulfill their payment obligations, the bank will be required to fund the payment terms.

Line of Credit

A flexible form of short-term loan in which the lender agrees to make a certain amount of money available to the borrower at a specified interest rate.

Loan Guarantee

A legally-enforceable agreement by a third-party to make payment on behalf of the borrower.

M

Master Note and Mortgage

A document created when a property is purchased for the first time and filed in the public land records for the purposes of tracking lender claims and priority of these claims associated with specific properties.

Maturity Date

See “Due Date.”

Mortgage

A written instrument that creates a lien on a piece of real property as security for payment of debt.

Mortgage Back

See "Seller Financing."

Mortgage Constant

See “Annual Loan Constant.”

Municipal and Tax-Exempt Bonding

A debt instrument issued by a state, municipality or county to fund state, municipal or county projects whose proceeds to bondholders (i.e., the interest payments) are exempt from federal, state and/or local taxation.

N

New Market Tax Credits

A tax credit established by the Community Renewal Tax Relief Act of 2000 that is designed to motivate revitalization of low-income communities. It allows 39% of the equity investment in a certified Community Development Entity to be tax-deductible over the ensuing seven years.

Nonprofit Equity Funds

An early-stage investment in a nonprofit entity that serves as startup capital until that nonprofit’s business model can be established. Investments generate a social return on investment from these funds.

Nonrecourse Loan

A loan where the lender cannot seek payment from other assets held by the borrower. The lender may only sell the asset to enforce the loan obligation or recoup its principal.

O

Optimization

A field of study seeking to maximize land-conservation efforts under specific conservation budget constraints. (Kaiser and Messer, 2010)

P

Partial Release Clause

A clause that allows a property owner to pay off a portion of the loan in order to free a portion of the property from the mortgage.

Participating First Mortgage

As part of the loan agreement, the borrower agrees a portion of the property’s income or sale proceeds with the lender. As money comes in, it is split between lender and borrower according to the agreement.

Payment Penalty

The fee paid by a borrower who repays some or all of the principal of a loan at a time prior to when such a payment is allowed under the terms of the loan.

PES

(PES) Payment for Ecosystem Services

Pledge of Personal Property

This allows the lender to have the legal ability to claim certain “pledged” assets should the borrower default.

Prepayment Penalty

See “Payment Penalty.”

PRI

Program-Related Investment

Prime Rate

The lowest rate charged on commercial loans, usually saved for the most credit-worthy clients of the lenders.

Principal and Interest Payment

A blended, periodic payment that is enough to pay off all interest owed and a portion of the originally borrowed amount.

Principal Balance

The amount of money borrowed or still owed on a loan, excluding accumulated interest.

Private Equity Funds

An aggregated amount of investor capital used to purchase an ownership interest in a non-public entity or entities.

Private Philanthropy

Charitable giving given by an individual or organization.

Promissory Note

A legally-binding document representing a promise to pay an agreed-upon sum to a specified person on a specified date or upon demand - a legally enforceable IOU.

R

Recourse Loan

In the event of default, the lender has personal right of action against the borrower. The lender can seek payment from other assets held by the borrower. The lender may sell or take possession of other pledged assets to recoup its loan amount.

Refugium

A geographical region that has remained unaltered by a climatic change affecting surrounding regions and that therefore forms a haven for fauna and flora.

Regeneration

Renewal of a tree crop, either by planting or natural seeding.

Repayment Terms

The terms under which a loan will be repaid. This may include the interest rate and the timing of repayment schedule.

Revolving Fund

A pool of loans made to individuals or small-businesses which self-funds via the proceeds received from loans within the portfolio.

Revolving Loan Fund

See “Revolving Fund.”

Right of First Offer

A contractual obligation that requires the seller first offer the asset for sale to the holder of this agreement before pursuing or entertaining third-party bids for the asset.

Right of First Refusal

A contractual obligation that requires the seller first give the holder of this agreement an opportunity to purchase the asset at agreed-upon terms before entering into the same transaction with a third-party.

Rollover Loan

A loan where the lender allows the borrower to continue owing the lender money beyond the maturity date of the loan in return for interest at an agreed-upon rate and on an agreed-upon repayment schedule.

S

Second Mortgage

A mortgage in which in the event of default and sale of the property, the second mortgagee will only be paid if there are sufficient funds left after the payment of the first mortgagee’s loan.

Second-Growth Trees

Trees that have been established as seedlings after original old-growth logging.

Secondary Financing

A broad term for a secondary, junior or subordinated loan which stands behind the first, principal or senior loan.

Self-Amortizing Mortgage Loan

A loan which will be paid off by the end of its term so that its term equals its amortization period.

Seller Financing

Funding the purchase of an asset when the seller accepts only a portion of the price upfront and accepts a loan with periodic payments and interest for the remainder. For a mortgage loan, the debt to the seller is registered on the title as a mortgage.

Seller-Financed Mortgage

See "Seller Financing."

SFI

Sustainable Forestry Initiative

Social Impact

Social impacts are changes that affect communities' income, employment, culture, communication, worldview, education, relationships, health, lifestyle and/or well-being.

Social Impact Bond

A contract with the public sector in which the issuer commits to use bond proceeds to fund improved social outcomes that result in public-sector savings.

State Tax Credits

A tax deduction or tax benefit which allows a taxpayer to reduce its taxes.

Substitution of Security

A process that allows holder of a loan to substitute other assets for the original collateral provided or pledged in the loan documents.

Surcharges

A secondary fee or other charge that increase the price of a good or service.

Surety Bonds

See “Bonding Damage Payments.”