Glossary terms

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Accredited Investor

A United States individual has a net worth of assets exceeding $1 million which excludes the value of their primary residence. Full description here.

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Allocation

An offering that is allocated to an investor comprises a certain percentage of the total offering vehicle, based on investment amount and split pro-rata. Read more about it here.

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Asset Class

Division of product offerings by an investment firm i.e. YieldStreet enables investors to easily navigate offerings that suit their individual preferences. Here you can learn more.

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Asset-based Investments

Asset-based investment, sometimes referred to as asset-based financing, is a form of investment that collateralizes company securities to obtain a loan. Find out more.

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Carried Interest

Carried interest acts as the basic compensation for a fund manager. It’s a share of the profits from the investment that is paid to the investment manager. Carried interest explained in full here.

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Collateral

Loans in which the borrower will offer assets as collateral to secure the loan. If the borrower defaults the lender will have ownership of those assets. Find out more about collateral here.

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Compound Interest

The accumulated interest of a loan or deposit for previous periods and on principal payments made. It’s also simply known as “interest on interest.” We expand here.

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Confession of Judgement

A legal written agreement is signed by the lender, agreeing to repay any money owed to the creditor (borrower) to avoid court action to resolve disputes. Learn more about it here.

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Contingency Fee Representation

When a plaintiff is represented on a contingency fee basis, no legal fees are paid until they have won their case, the lawyer receives a percentage thereof. Broader description available here.

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Correlation

A mutual relationship between two different investments that have a similar response to market influence and market-related forces. A full description here.

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Cost of Capital

Cost of capital refers to the minimum rate of return a business or company has to generate before a new purchase, or investment starts to make money. Find out more.

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Covenants

An indenture that is entered by a borrowing party or individual to proclaim which activities may or may not be carried out, these include certain agreements. Here you can learn more.

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Default

When a borrower is unable to make repayments on their loan according to previously agreed-upon terms and conditions, known as being “in default.” Default explained here.

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Disbursement

Payments made by any private or public fund to investors. Companies use disbursements to complete the final payment on any form of goods and expenses. Examples available here.

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HNWI or High Net Worth Individuals

Typically known as an HNWI, this individual has financial assets, excluding primary residence that exceeds the $1 million and does not surpass $5 million. HNWI described in full.

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Internal Rate of Return

The method used to evaluate the attractiveness of an investment opportunity. The IRR presents cash flows equal to zero. Learn more here.

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Inventory

All tangible goods are housed by a business with the intent of it being sold as part of business operations, for example, food, clothing, car parts, etc. A full description here.

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Inventory Financing

Asset-backed lending makes use of company inventory as a form of collateral to help secure a loan. Inventory can be seized when borrowers default. Full description available.

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Investment Memorandum

The investment memorandum acts as a profile considering all investments to determine whether the offerings will meet the client’s desired needs. Example of investment memorandum included here.

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Irrevocable Letter Of Direction (LOD)

Known as a letter of direction gives the recipient-specific rights regarding the sender or writer’s finances, written to a bank or family members. LOD explained better here.

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Lien

A legal action in which a lender seizes the property of the borrower that’s failed to make payments on a loan. Property is held until repayments are made. A broader description is available below.

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Liquidity

The rate at which assets owned by an individual or company can easily be sold off for cash. These can include publicly traded stock or Treasury Bills. Learn more about liquidity here.

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Loan-To-Value (LTV)

Used to calculate and evaluate collateral. This refers to the loan amount and the underlying assets which determine the cushion the borrower has. Here is a full LTV description.

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Mass Tort

The civil action of numerous plaintiffs against selected or multiple corporate defendants. These civil grievances are resolved in state or federal courts. Mass Tort fully explained here.

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Non-recourse

The lender pledges a form of collateral, i.e. real estate or property, for which the borrower is not personally liable. More details are available here.

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Operating Agreement

Bylaws described in an operating agreement, members and investors agree to operate the newly formed SPV. These apply to Yieldstreet offerings. Learn what to include.

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Originator

Originators assist with determining the terms of the loan with the borrower, performing due diligence. The originator acts as the liaison for the borrower.

Find out more.

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Participation

An originator that sells parts of a loan to individuals, businesses, and financial investment firms. Participation can be 100% or as little as 5%. Learn about this concept.

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Participation Agreement

An agreement was signed by the originator and investors. With YieldStreet, managers of the SPV sign the agreement as a proxy to purchase a loan percentage. See a more detailed description here.

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Payment Frequency

The frequency represents how often investors should receive forms of principal or interest repayments on their investments. Here you can find out more.

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Plaintiff

An individual or group which begins a new case in the court of law against a defendant, both parties are represented by an attorney or lawyer. The definition is expanded here.

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Post-settlement funding

Funding is allocated to a plaintiff before any compensation from the settlement of the case can be accessed or received by the plaintiff. Description expanded.

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Pre-settlement Funding

Non-recourse funding plaintiffs receive while awaiting to start or resume the trial. This funding is allocated for personal use and legal fees. Explained in full.

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Pro-rata

A Latin phrase that describes a proportionate allocation of a certain amount. This will include a fraction amount according to its share of the whole. Pro-Rata explained.

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Senior-secured

A portion or part of the debt is paid off first secured with collateral. Normally offered by corporations, Limited Liability Companies or a Limited Partnership. More on this topic.

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Seniority

The order in which a company is required to pay off debt is usually above junior debt, applicable to companies who are operational or who have filed for bankruptcy. We expand here.

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Settlement

An agreement or resolution between two or more disputing parties about a legal matter. Settlement is agreed upon before the commencement of a court case. Topic expanded here.

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SPV or Special Purpose Vehicle

A company can form an SPV, a separate entity from the primary company which is used to secure and privatize any form of company investment. Examples of SPV.

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Subscription Agreement

An agreement signed by all investors looking to purchase a portion of a Special Purpose Vehicle. Each investor will have pro-rata ownership of the SPV. See more here.

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UCC-1 / Perfected Interest

A legal financing statement filed by a creditor allows them to give notice that it has or may have an interest in the personal property of a debtor. Examples available here.

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