Debt Capital

Debt capital refers to the borrowed funds a company uses to finance its operations, assets, or expansion projects. Unlike equity capital, debt capital requires repayment with interest.

Sources:

• Bank loans

• Bonds

• Convertible notes

• Private debt funds

Role in Capital Structure:

• Lower cost compared to equity.

• Interest payments are typically tax-deductible.

• Increases financial risk when overly leveraged.