Capital is the money and assets a business uses to operate and grow. It is the financial fuel behind everything from buying stock to investing in equipment. In a lending context, you will often hear capital used in a few related ways.
Common meanings
- Working capital — the funds available for day-to-day running of the business, such as paying wages and suppliers.
- Growth or investment capital — money put towards expanding the business, such as new premises or equipment.
- The capital of a loan — the original amount borrowed, also called the principal, separate from interest.
Capital and borrowing
Businesses raise capital in different ways: from profits they retain, from owners investing, or from borrowing. Each has trade-offs. Borrowing can provide capital quickly without giving up ownership, but it carries the commitment to repay.
Credicorp lends only to UK limited companies and LLPs for business purposes. A Credicorp Flex or Credicorp Slice facility is one route to raising capital for the business. We assess affordability first, and the amount, rate and term that apply are set out in your offer. We do not take personal guarantees from directors; the loan is to the company.
See also: What is working capital?, Understanding the breakdown between capital and interest in your balance, What is net working capital?.