Debt capital refers to funds that are borrowed by a company and must be repaid with interest. Debt capital is typically provided by financial institutions, such as banks, or by investors through the issuance of bonds or other debt instruments.
Debt capital is a common source of funding for businesses, especially for those that are not yet profitable or that do not have a significant amount of equity capital. It can provide a business with the funds it needs to finance operations, expand its business, or invest in new projects.
There are several types of debt capital that businesses can use, including:
Debt capital can be an important source of funding for businesses, but it is important to carefully consider the terms and conditions of any debt financing, as well as the potential risks and implications for the business. Companies that rely heavily on debt financing may face financial challenges if they are unable to generate sufficient profits to service their debt obligations.