What does Capital mean in business?Published on 31st December 2018 2018-12-31T12:00:00+00:00 - Last update on 1st January 2019 2019-01-01T23:54:34+00:00
In order to take your business from A to B there’s a vital resource that you simply can’t do without - capital. The lifeblood of every UK business, possessing it in sufficient quantities is essential for your ability to support growth, maintain reliable supply chains, run day-to-day operations and remain sustainable for the long-term. However, capital isn’t something that is easy to acquire, which has lead to the collapse of many high profile brands in recent years. Nevertheless, raising capital for your business is a challenge you must rise to if you’re to succeed. So, what does capital mean in business and how can it be obtained?
What is Capital?
Intrinsic to the survival of any business, when we think of capital, the notion that enters our minds is that of cash. However, the term capital also describes a variety of other financial assets such as equity and debt. This means that the term capital could extend to assets like company vehicles, account holdings, stocks and shares, patents, software, machinery or anything else with a monetary worth. But, it’s also worth noting that the term does exclude raw materials which may be used in manufacturing. So, what does this actually mean for both you and your business?
How can I acquire Capital?
Because capital can be used to describe so many different types of financial assets it means that there are a variety of ways in which it could be acquired. Yet if you’re a start-up or small business, attempting to seize upon the benefits that capital has to offer can still feel like trying to climb a mountain. But if you know where to look, the potential to achieve your goals is within the reach of your business. So what are the different types of capital of you could acquire?
What is Venture Capital in business?
Venture Capital is, essentially, money which has been offered to you by a Venture Capitalist in order to support your business and any plans you may have for the future.
Generally non-repayable and subject to the investor’s willingness to invest, there’s no limit to how much capital you might receive taking this route. But anything that you do receive will come at the cost of equity (shares) within you business.
What is Share Capital in business?
In this instance, Share Capital describes the funds that have been invested in your business by investors who, as a result, now possess a shareholding. However, Share Capital can be used to support any aspect of your business and, being based on investor confidence, there’s no limited to how much you may receive.
What is Debt Capital in business?
On the other hand, Debt Capital describes the funds that you may receive from applying for any type of business finance agreement such as a Secured Business Loan. If you’re looking to acquire Debt Capital, it worth noting that there is a wide range of business finance products on offer through the UK lending industry, including Alternative Finance.
What is Equity Capital in business?
Meanwhile, Equity Capital describes the equity worth in your business' tangible and financial assets, such as unencumbered equipment, machinery, vehicles, property or even unpaid business-to-business (B2B) invoices. Such capital can be released back into your business through the sale of assets or by using an Asset Refinance solution.
Looking to acquire to additional capital for your business?
Despite the importance of raising capital, it’s an area that all too many business owners struggle with. But when you consider the many forms that capital can come in you’ll realise that there are plenty of ways in which this obstacle can be overcome. It’s just a matter of finding the pathway that’s suitable for your business’ needs. Yet, as your business develops, the demand for capital will only increase. Fortunately, that’s where the Alternative Finance sector could help. So, rather than relying on your own funds or giving away shares, you could, instead, support your goals by applying for business finance, which is where we can help.
At Rangewell, we’re an Access to Finance specialist working with over 350 lenders to offer you an overview of more than 23,000 business finance products quickly and easily. Our services are free to use for business owners and their advisors and we’ll also guide you through the application process right through to draw down. So if you’re looking for a way to raise capital for your business, apply for Alternative Finance today or find out more with Rangewell.
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