What does capital mean in business?

2 min read

Capital in business refers to the sum of financial assets that are required to produce goods or services. These funds can be used to initiate operations, meet daily expenses or grow and expand the business.

Business capital has three broad categories:

  1. Seed capital
    Also known as seed funding, this is the initial investment required to set up a business. Every day expenses include purchasing or leasing the premises (office, factory, warehouse, etc.), buying necessary equipment and setting up other infrastructure.
  2. Working capital
    Working capital refers to the funds required to meet the day-to-day functioning of a business. Everyday expenses include rent, utility bills, employee salaries, procuring raw material or inventory, administration, etc.
  3. Growth capital
    Funds required by a business to expand its operations is called growth capital or expansion capital. These funds can be used for both expansions as well as sustenance of business operations during this process.

Also Read: Funding options to raise capital for your business

Businesses can acquire capital via equity or debt. Equity capital refers to funds a business receives by selling its stock, whereas debt capital refers to funds a business gets as credit from a financial institution.

You can avail of debt financing in the form of Business Loans from Bajaj Finserv and get up to Rs. 45 lakh.

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