{ "name": "South African private-lending glossary", "description": "Definitions of the terms used in South African private lending, including the words that carry more than one legal meaning and are therefore routinely misread.", "version": "1.2", "modified": "2026-09-18", "publisher": "Private Lending Association of South Africa", "source": "https://privatelendingassociation.co.za/data/glossary.json", "licence": "CC BY 4.0", "licenceUrl": "https://creativecommons.org/licenses/by/4.0/", "citation": "Private Lending Association of South Africa, \"South African private-lending glossary\", version 1.2, 2026-09-18.", "count": 61, "data": [ { "id": "senior-debt", "term": "Senior debt", "alsoKnownAs": null, "definition": "Debt that ranks first for repayment out of a borrower's assets or cash flow. Senior lenders are paid before subordinated and mezzanine lenders, and before equity. Ranking is one of the two questions that decide what a loan is actually worth; the other is security." }, { "id": "subordinated-debt", "term": "Subordinated debt", "alsoKnownAs": "Junior debt", "definition": "Debt that ranks behind senior debt for repayment. It carries a higher rate because it absorbs loss first. A lender who does not know where they rank does not know what they are being paid for." }, { "id": "mezzanine-debt", "term": "Mezzanine debt", "alsoKnownAs": null, "definition": "Debt sitting between senior debt and equity, often with an equity-like feature such as a participation in profits or a conversion right. Common in property development and buy-outs." }, { "id": "covenant", "term": "Covenant", "alsoKnownAs": null, "definition": "A promise in a loan agreement about what the borrower will do, or maintain, while the loan is outstanding — a minimum cover ratio, a cap on further borrowing, a reporting obligation. Covenants matter only if somebody is actually monitoring them." }, { "id": "default-rate", "term": "Default rate", "alsoKnownAs": null, "definition": "The higher interest rate that applies after a borrower defaults. Distinct from the default *frequency* in a portfolio, which is what people usually mean when they ask about 'the default rate'. Worth clarifying which is meant." }, { "id": "ltv", "term": "LTV (loan-to-value)", "alsoKnownAs": null, "definition": "The loan amount as a percentage of the value of the asset securing it. A 60% LTV means the asset can lose 40% of its value before the loan is unsecured on paper — assuming the valuation was right and the asset can actually be sold." }, { "id": "dscr", "term": "DSCR (debt service cover ratio)", "alsoKnownAs": null, "definition": "Cash available to service debt, divided by the debt service due. A DSCR of 1.0 means the borrower generates exactly enough to pay, with no margin for anything going wrong." }, { "id": "intercreditor", "term": "Intercreditor agreement", "alsoKnownAs": null, "definition": "An agreement between lenders to the same borrower setting out who ranks where, who may enforce, and how proceeds are shared. In any structure with more than one lender, this decides what your rights are actually worth." }, { "id": "security-spv", "term": "Security SPV", "alsoKnownAs": null, "definition": "A special-purpose vehicle that holds security for the benefit of lenders, so that the security does not have to be re-registered every time lenders change. Introduces its own question: who controls the SPV." }, { "id": "participation", "term": "Participation", "alsoKnownAs": null, "definition": "A word carrying at least three different legal meanings, which is why it should never be read on its own. It may mean a transfer of a share of a loan claim, so the holder owns part of the claim against the borrower. It may mean a contractual entitlement against the participation provider, so the holder's debtor is that provider and not the borrower. Or it may mean a participatory interest in a participation-bond collective investment scheme, which is a regulated collective structure. Ask which rights are acquired, and against whom." }, { "id": "origination", "term": "Origination", "alsoKnownAs": null, "definition": "Finding, structuring and documenting a loan so that it can be funded. Origination is a distinct function from funding it, and originators are frequently paid on volume, which is worth knowing." }, { "id": "servicing", "term": "Servicing", "alsoKnownAs": null, "definition": "Running a loan after it is made — collecting payments, applying receipts, chasing arrears, reporting to lenders. Ask who services a loan and what happens to servicing if that party fails." }, { "id": "mandate", "term": "Mandate", "alsoKnownAs": null, "definition": "The written statement of what a manager may and may not lend against — sectors, sizes, ranking, concentration limits, geography. A fund's mandate is the closest thing a lender has to a product description." }, { "id": "fund-manager", "term": "Fund manager", "alsoKnownAs": null, "definition": "The party that raises a private-debt fund, decides what it lends against and manages the portfolio. In a fund structure the manager, not the lender, makes every credit decision." }, { "id": "drawdown", "term": "Drawdown", "alsoKnownAs": null, "definition": "Capital being called from a committed lender, or advanced to a borrower in stages. In development finance, drawdowns are usually tied to certified progress on site." }, { "id": "vintage", "term": "Vintage", "alsoKnownAs": null, "definition": "The year a fund began deploying capital. Vintage matters because credit conditions at the point of lending shape outcomes far more than anything the manager does afterwards." }, { "id": "workout", "term": "Workout", "alsoKnownAs": null, "definition": "Negotiating a restructure with a borrower who cannot pay on the original terms, as an alternative to enforcement. Usually recovers more than a forced sale, and takes far longer." }, { "id": "recovery", "term": "Recovery", "alsoKnownAs": null, "definition": "What is actually collected after a default, as a percentage of the amount owed, net of costs and time. The number that matters, and the one least often published." }, { "id": "private-credit", "term": "Private credit", "alsoKnownAs": null, "definition": "The institutional name for lending that is negotiated rather than issued and traded. Used interchangeably with private debt. Same economics as private lending; different scale, access and regulation." }, { "id": "concentration", "term": "Concentration", "alsoKnownAs": null, "definition": "How much of a lender's exposure sits with one borrower, sector, asset type or geography. The single most common reason a portfolio that looked fine produces a large loss." }, { "id": "arrear-levy", "term": "Arrear levy", "alsoKnownAs": null, "definition": "A levy a sectional-title owner owes their body corporate and has not paid. Arrear levies are a debt owed to the scheme, recoverable from the owner, and they are one of the commonest forms of security behind private lending to community schemes in South Africa." }, { "id": "authorised-dealer", "term": "Authorised dealer", "alsoKnownAs": null, "definition": "A bank licensed by the South African Reserve Bank to handle foreign-exchange transactions on behalf of residents. Capital sent offshore moves through an authorised dealer, which applies the exchange-control rules and reports the transaction." }, { "id": "body-corporate", "term": "Body corporate", "alsoKnownAs": null, "definition": "The legal entity made up of all owners in a sectional-title scheme, responsible for running and maintaining the common property and for collecting levies. It comes into existence automatically when the first unit is transferred, and it can borrow in its own name." }, { "id": "capital", "term": "Capital", "alsoKnownAs": null, "definition": "The amount lent, as distinct from the interest it earns. In private lending, capital is returned as the loan is repaid rather than sold; whether it comes back on a stated date or as recoveries arrive depends entirely on the structure." }, { "id": "cession", "term": "Cession", "alsoKnownAs": null, "definition": "The transfer of a personal right — typically a right to be paid — from one party to another. A lender may take cession of a borrower's book debts as security, meaning that if the borrower defaults, the lender may collect those debts directly." }, { "id": "community-scheme", "term": "Community scheme", "alsoKnownAs": null, "definition": "Any scheme in which people share use of and responsibility for common parts: sectional-title schemes, share-block companies, homeowners' associations, retirement schemes and housing co-operatives. Defined in the Community Schemes Ombud Service Act 9 of 2011." }, { "id": "credit-agreement", "term": "Credit agreement", "alsoKnownAs": null, "definition": "The agreement between a credit provider and a borrower under which credit is granted. Its terms, and who signs it, determine who carries the obligations of the National Credit Act." }, { "id": "credit-provider", "term": "Credit provider", "alsoKnownAs": null, "definition": "The party that grants credit under a credit agreement. Where the National Credit Act applies to the agreement, that party may be required to register with the National Credit Regulator. Whether the Act applies turns on the parties, whether the agreement is at arm's length, the borrower's legal form and size, and the type and amount of the agreement — so the position has to be established from the documents rather than assumed." }, { "id": "csos", "term": "CSOS", "alsoKnownAs": "Community Schemes Ombud Service", "definition": "The statutory body that resolves disputes in community schemes and holds their governance documentation. Where a private loan is made to a community scheme, CSOS is part of the environment the loan sits in, though it is not a guarantor of anything." }, { "id": "default", "term": "Default", "alsoKnownAs": null, "definition": "A borrower's failure to meet an obligation under the loan agreement — most often a missed payment, but it can include breaches of other undertakings. What counts as default, and what the lender may then do, should be stated in the agreement rather than assumed." }, { "id": "deposit", "term": "Deposit", "alsoKnownAs": null, "definition": "In the sense used by the Banks Act 94 of 1990, money taken from the general public on terms that it will be repaid. Taking deposits from the public is a licensed banking activity. A private loan is not a deposit, and an arrangement that behaves like deposit-taking without a licence is a serious warning sign." }, { "id": "exchange-control", "term": "Exchange control", "alsoKnownAs": null, "definition": "The South African rules governing how residents may move capital across the border, administered by the Reserve Bank's Financial Surveillance Department through authorised dealers. The rules set out allowances, approvals and reporting rather than prohibiting movement outright." }, { "id": "fica", "term": "FICA", "alsoKnownAs": "Financial Intelligence Centre Act 38 of 2001", "definition": "The Act requiring accountable institutions to identify and verify the people they deal with on a risk-based basis, keep records and report suspicious transactions. Where a party is an accountable institution, expect customer-due-diligence procedures; the precise checks depend on the institution, the client and the transaction. An unexplained absence of identity checks where they should apply is a warning sign." }, { "id": "fixed-deposit", "term": "Fixed deposit", "alsoKnownAs": null, "definition": "A bank deposit committed for a stated term at a stated rate. The bank owes the depositor the money, and South African deposit insurance covers a qualifying depositor up to a limit per bank if the bank fails." }, { "id": "foreign-investment-allowance", "term": "Foreign investment allowance", "alsoKnownAs": "Foreign capital allowance", "definition": "The allowance under which a South African resident taxpayer may transfer capital offshore in a calendar year, over and above the single discretionary allowance, on obtaining a tax compliance status PIN from SARS. The rand limits are set by the authorities and change from time to time; confirm the current figure with SARS or an authorised dealer." }, { "id": "good-standing", "term": "Good standing", "alsoKnownAs": null, "definition": "A status term, not a legal one. On this site it means a consultant's agreement is current, no disciplinary process is open against them, and nothing has been found that would cause the listing to be withdrawn. It is a statement about a record on a date, not a prediction of conduct." }, { "id": "guarantee", "term": "Guarantee", "alsoKnownAs": null, "definition": "An undertaking by one party to answer for another's obligation. A guarantee is worth what the guarantor is worth: an undertaking from a company with no assets adds a signature to the file and nothing to the security." }, { "id": "in-duplum", "term": "In duplum", "alsoKnownAs": null, "definition": "The South African rule that unpaid interest stops running once it equals the outstanding capital. The common-law rule is reinforced for credit agreements by section 103(5) of the National Credit Act. It limits how far a debt can grow through arrears — and therefore how much a lender can ultimately recover." }, { "id": "interest", "term": "Interest", "alsoKnownAs": null, "definition": "The price of money over time, paid by a borrower to a lender. It is a lender's entire return: nothing has to rise in value for interest to be earned, and nothing about the arrangement pays more if the borrower does unusually well." }, { "id": "it3b", "term": "IT3(b)", "alsoKnownAs": null, "definition": "The tax certificate South African financial institutions issue summarising investment income paid to a client. Whether a particular payer issues one depends on its own reporting obligations. Income earned is declarable whether or not a certificate is received, and the treatment of a given return depends on the instrument, the source and the taxpayer — confirm it with a tax practitioner." }, { "id": "levy", "term": "Levy", "alsoKnownAs": null, "definition": "The contribution a sectional-title owner pays their body corporate to fund running costs, maintenance and reserves. Levies are the scheme's income; when enough of them go unpaid, the scheme has a real shortfall and a real claim." }, { "id": "liquidity", "term": "Liquidity", "alsoKnownAs": null, "definition": "How readily capital can be turned back into cash. Private lending is generally illiquid: there is no market to sell into, so capital comes back as the loan is repaid or not at all until it is. Illiquidity is one of the things a lender is being paid for." }, { "id": "loan-agreement", "term": "Loan agreement", "alsoKnownAs": null, "definition": "The document that records what was lent, to whom, at what rate, for how long, what secures it, what happens on default and how disputes are resolved. If an arrangement cannot produce one, there is nothing to discuss." }, { "id": "marginal-rate", "term": "Marginal rate", "alsoKnownAs": null, "definition": "The rate of income tax applied to the next rand a taxpayer earns. Interest is taxed at the lender's marginal rate, which is why two lenders earning the same interest can keep materially different amounts of it." }, { "id": "mortgage-bond", "term": "Mortgage bond", "alsoKnownAs": null, "definition": "Security over immovable property, registered in the Deeds Office. It is the strongest commonly available form of security in South Africa and the slowest to enforce: registration takes weeks and enforcement is a court process." }, { "id": "nca", "term": "National Credit Act", "alsoKnownAs": "NCA; Act 34 of 2005", "definition": "The Act governing consumer and small-business credit in South Africa. Where it applies, it may require the party granting credit to register, regulates the cost of credit, imposes affordability duties and gives borrowers remedies. It does not apply identically to every arrangement: the parties, the borrower's legal form and size, whether the agreement is at arm's length, and the type and amount of the agreement all bear on it." }, { "id": "ncr", "term": "National Credit Regulator", "alsoKnownAs": "NCR", "definition": "The regulator that registers and supervises credit providers, credit bureaux and debt counsellors under the National Credit Act. Its register of registrants is public, and checking a counterparty's registration on it takes a couple of minutes." }, { "id": "ncrcp", "term": "NCRCP number", "alsoKnownAs": null, "definition": "The registration number issued to a registered credit provider by the National Credit Regulator. Where registration is required, the provider will quote the number without being asked and it can be checked against the NCR's public register. Where an arrangement falls outside the Act, no number exists — which is a different thing from one being withheld, and worth establishing rather than assuming either way." }, { "id": "notarial-bond", "term": "Notarial bond", "alsoKnownAs": null, "definition": "Security over movable property, registered by a notary. A special notarial bond over specified, identifiable movables gives the lender a real right; a general notarial bond ranks lower and must be perfected before it bites." }, { "id": "prescription", "term": "Prescription", "alsoKnownAs": null, "definition": "The extinction of a debt through the passage of time. Under the Prescription Act 68 of 1969 an ordinary contractual debt prescribes after three years unless interrupted, which is why a lender's patience with a non-paying borrower is not costless." }, { "id": "prime", "term": "Prime lending rate", "alsoKnownAs": "Prime", "definition": "The benchmark rate South African banks quote to their lowest-risk clients. It moves with the Reserve Bank's repo rate and is the anchor from which most rand lending is priced." }, { "id": "prime-linked", "term": "Prime-linked", "alsoKnownAs": null, "definition": "A return quoted relative to prime — prime plus a stated margin — rather than as a fixed number. It rises when rates rise and eases when they fall, which makes it a floating return rather than a guaranteed one." }, { "id": "private-lender", "term": "Private lender", "alsoKnownAs": null, "definition": "A person or entity whose capital funds lending and whose return is the interest paid on it. The term covers an individual lending directly under their own agreement and an individual whose capital is deployed through a registered credit provider — two quite different positions that share a name." }, { "id": "repo-rate", "term": "Repo rate", "alsoKnownAs": null, "definition": "The rate at which the South African Reserve Bank lends to commercial banks, set by its Monetary Policy Committee at scheduled meetings. Changes in the repo rate move prime, and therefore move prime-linked returns." }, { "id": "secured", "term": "Secured", "alsoKnownAs": null, "definition": "Backed by a claim over an asset or a right that may be enforced if the borrower does not pay. Two things are easily run together: the loan claim, and the security supporting it. They are separate, and the security may stand in favour of somebody other than you — an administrator, an issuer or a trustee for a group of holders. Security changes what happens after a default; it does not make default less likely, does not guarantee full recovery, and does not by itself tell you who may enforce it." }, { "id": "single-discretionary-allowance", "term": "Single discretionary allowance", "alsoKnownAs": "SDA", "definition": "An annual allowance under which a South African resident over 18 may transfer funds abroad for any legal purpose without a tax compliance status PIN. The rand limit is set by the authorities and has changed over time; confirm the current figure with SARS or an authorised dealer before planning around a number." }, { "id": "subordination", "term": "Subordination", "alsoKnownAs": null, "definition": "An agreement that one creditor's claim ranks behind another's. A subordinated lender is paid after the senior lender in a recovery, which is a materially different position from the one the headline rate suggests." }, { "id": "suretyship", "term": "Suretyship", "alsoKnownAs": null, "definition": "A written undertaking by a third party to pay if the borrower does not. In South Africa a suretyship must be in writing and signed by the surety to be enforceable." }, { "id": "term", "term": "Term", "alsoKnownAs": "Tenor", "definition": "How long capital is committed. Some private-lending arrangements have a fixed term with a date attached; others have none at all, and capital returns as underlying loans are repaid. The difference matters more to most lenders than the rate does." }, { "id": "unlawful-deposit-taking", "term": "Unlawful deposit-taking", "alsoKnownAs": null, "definition": "Taking money from the general public on terms that it will be repaid, without a banking licence. It is an offence under the Banks Act, and it is the shape most collapsed 'investment' schemes take. A structure that pools money from strangers and promises a fixed return deserves this question directly." }, { "id": "verified-consultant", "term": "Verified private-lending consultant", "alsoKnownAs": null, "definition": "On this site, a consultant whose identity has been confirmed, who has completed the required training, holds a current consultant agreement and is in good standing, and whose status can be checked on a public profile. It is not a regulatory approval and not an authorisation to give financial advice." } ] }