What is Capital In Business?
Capital is a word thrown around a lot whenever the topic of business is discussed, but what does capital actually mean?
Business capital: What is it?
While many may hear the word and immediately think of money, cash or earnings, this doesn't wholly describe what 'capital' is for a business.
The term capital is used to describe a range of financial assets, including both debt and equity, meaning the term covers anything with monetary worth.
Capital can include:
Stocks and shares
Patents and intellectual property
Equipment and machinery
However, it is worth noting that capital does not refer to any raw materials used by manufacturing businesses.
Capital allows UK businesses to operate and grow; having it in large enough quantities is essential to maintain supply chains, run their day-to-day operations, and remain sustainable.
How do I acquire capital?
For businesses, particularly small business owners, acquiring capital can feel like a daunting task. As the term capital can be used to describe a range of different types of financial assets, there are many ways it can be acquired.
If you know where to look, you can achieve your business goals and acquire what you need to get your business up and running or to the next level.
What are the different types of capital?
With so many different types of capital in business, it's important to have a firm understanding of them all before focussing on your business goals to achieve one type of business capital.
We've broken down the main types of business capital below:
What is 'Equity Capital' in business?
Equity Capital refers to the worth of all your business' tangible and financial assets, which can include machinery, vehicles, equipment and unpaid business-to-business invoices.
This capital can be released back into your business through sale or using an Asset Refinance solution.
What is 'Debt Capital' in business?
Debt Capital covers the funds that your business may have received from any form of a business finance agreement (such as Secured Business Loans).
To acquire Debt Capital, there is a wide range of business finance products available across the UK lending industry, including Alternative Finance solutions.
What is 'Venture Capital' in business?
Another term you may be familiar with is Venture Capital.
In essence, this describes the money offered to your business from a Venture Capitalist, which is used to support your business and its plans to move forward.
This form of capital is typically non-repayable and without limit (depending on the investor); however, it does come at the cost of your business's shares (or equity).
What is 'Share Capital' in business?
Share Capital describes any funds that have been invested into your business by investors who now possess a shareholding.
This type of capital can support any aspect of the company as it is based on the individual investors involved.
Are you looking to acquire capital for your business?
There is no doubt that raising capital is vital for a business, but it is something that many business owners have difficulty with.
However, there are many routes to acquiring the capital you may need, and The Lending Channel is on hand to help meet your business needs.
The most important aspect of the process is finding the most suitable path for you and your business. Whether it is looking at the Alternative Finance sector or short-term financial resources to help your business grow or applying for business finance, our services are designed to help you.
Contact our finance team today to acquire the business capital that you need.