What is financial capital?

Learn what financial capital means

Capital is a catch-all term that’s used to describe a person or organisation’s wealth. It could be cash, assets or a mixture of the two.

In the business world, capital is often associated with money that is being used to invest or the assets and funds that a specific holds.

There are three types of capital that are key most businesses.

Debt capital


In simple terms, debt capital is borrowed money.

When a company borrows money from individuals, credit card companies or banks, they are acquiring debt capital.

Debt capital must be paid off at specified intervals with interest rates.

Whether or not a company can obtain debt capital will usually be decided by its prior credit history. This will also generally define the terms under which the company receives any debt capital.

Equity capital


Equity capital is a fancy way of describing money that a company receives from investments.

A company will acquire equity capital via public or private channels.

If a firm receives money from a private investor, they are acquiring private equity capital.

If a firm goes public and lists shares on a stock exchange, it will raise public equity capital from any investors that choose to buy its shares.


Working capital


Working capital is the money that a company uses to meet its short-term obligations. That might be paying office rent, salaries or debt payments.

Companies will generally have to hold liquid assets - cash or assets that can be easily converted into cash - to use as their working capital.


More terms

Simple pricing plans

Choose how you'd like to pay:

Annually

Save 17%

Monthly

Annually

Save 17%

Monthly

£0.00/mo

Accounts

GIA pink
General investment account

Benefits

  • Commission-free trades (other charges may apply. See full pricing table.)
  • Trade USD & EUR stocks at the exchange rate + a 0.99% FX fee
  • Fractional US Shares
  • Access to more than 4,700 stocks, including the most popular shares and ETFs
  • 1% AER on up to £1,000 uninvested cash
£4.99/mo

£59.88 billed annually

£5.99/mo

Billed monthly

Accounts

GIA white
General investment account
ISA
Stocks and shares ISA

Benefits
Everything in Basic, plus:

  • Full range of over 6,000 US, UK and EU stocks and ETFs
  • Trade USD & EUR stocks at the exchange rate + a 0.59% FX fee
  • Automated order types, including recurring orders
  • Advanced stock fundamentals
  • 3% AER on up to £2,000 uninvested cash
£9.99/mo

£119.88 billed annually

£11.99/mo

Billed monthly

Accounts

GIA white
General investment account
ISA
Stocks and shares ISA
SIPP white
Self-invested personal pension (SIPP)

Benefits
Everything in Standard, plus:

  • Trade USD & EUR stocks at the exchange rate + a 0.39% FX fee
  • Priority customer service
  • Freetrade Web beta
  • 5% AER on up to £3,000 uninvested cash

Download the app to start investing now



When you invest your capital is at risk.