Capital Funding

What is 'Capital Funding'

Capital funding is the money that lenders and equity holders provide to a business. A company's capital funding consists of both debt (bonds) and equity (stock). The business uses this money for operating capital. The bond and equity holders expect to earn a return on their investment in the form of interest, dividends and stock appreciation.

BREAKING DOWN 'Capital Funding'

Entire companies exist whose sole purpose is to provide capital funding. Such a company might specialize in funding a specific category of companies, such as healthcare companies, or a specific type of company, such as assisted living facilities. The capital funding company might also specialize in providing a certain type of funding, such as short-term financing, or it might provide financing of all types. It could also choose to focus on funding a certain stage of the business, such as its construction of a facility, or it might fund businesses at any stage. Venture capitalists are an example of those that provide capital funding.



RELATED TERMS
  1. Cost Of Capital

    The required return necessary to make a capital budgeting project, ...
  2. Funding Gap

    The amount of money needed to fund the ongoing operations or ...
  3. Capital Appreciation Fund

    A mutual fund that attempts to increase asset value primarily ...
  4. Capital Markets

    Capital markets are markets for buying and selling equity and ...
  5. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  6. Debt Fund

    An investment pool, such as a mutual fund or exchange-traded ...
Related Articles
  1. Mutual Funds & ETFs

    Mutual Funds: Different Types Of Funds

    No matter what type of investor you are, there is bound to be a mutual fund that fits your style. According to the last count there are more than 10,000 mutual funds in North America! That means ...
  2. Retirement

    Analyzing The Best Retirement Plans And Investment Options: Mutual Funds

    What they are: A professionally managed pool of stocks, bonds and/or other instruments that is divided into shares and sold to investors. Pros: Diversification; liquidity; simplicity; ...
  3. Mutual Funds & ETFs

    The 4 Best American Funds for Growth Investors in 2016

    Discover four excellent growth funds from American Funds, one of the country's premier mutual fund families with a history of consistent returns.
  4. Economics

    Explaining Cost Of Capital

    Cost of capital is the cost of funds used to finance a business.
  5. Investing

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  6. Professionals

    Specialized Funds

    FINRA Series 6: Section 10 Specialized Funds. This section deals with types of specialized funds namely index funds, global funds, international fund, asset allocation fund and other specialized ...
  7. Professionals

    Types of Mutual Funds

    FINRA/NASAA Series 66 Section 2 - Types of Mutual Funds. Types of mutual funds: money market funds, bond funds, balanced funds and equity income funds.
  8. Professionals

    Other Types of Mutual Funds

    FINRA/NASAA Series 66 Section 2 - Other Types of Mutual Funds. Other types of mutual funds: Growth and Income, International, global, index, asset allocation, sector and specialized.
  9. Professionals

    Investment Objectives

    Investment Objectives
  10. Professionals

    Types of Funds

    FINRA Series 6: Section 10 Types of Funds. This section describes different types of funds: Money Market Fund, Bond Fund, Government Bond Fund, Municipal Bond Fund, Corporate Bond Fund, Balanced ...
RELATED FAQS
  1. Can mutual funds only hold stocks?

    Learn about which types of mutual funds consist of only stocks, which may include stocks in addition to other assets and ... Read Answer >>
  2. How does a company's capitalization structure affect its profitability?

    Learn about capitalization structure and how the combination of debt and equity a company uses to fund operations can affect ... Read Answer >>
  3. How is venture capital different from other kinds of equity financing?

    Learn how venture capital equity financing differs from other funding options and what companies need to be aware of prior ... Read Answer >>
  4. Do mutual funds invest only in stocks?

    Discover which types of mutual funds invest in only equities, or stocks, and which mutual funds also include investments ... Read Answer >>
  5. Do mutual funds pay interest?

    Find out how and why some mutual funds pay interest, and which types of funds make regular dividend distributions to shareholders ... Read Answer >>
  6. What role do shareholders play in a capital budget?

    Learn about why shareholders play an integral role in capital budgeting and how it benefits businesses to use equity capital ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center