Capital Note

DEFINITION of 'Capital Note'

Short-term unsecured debt generally issued by a company to pay short-term liabilities. Capital notes carry more risk than other types of secured corporate debt, because capital note holders have the lowest priority. The capital note often has a higher interest rate because it is unsecured.

BREAKING DOWN 'Capital Note'

The interest rate offered on a capital note is heavily dependent on the credit rating of the business, because it is all the investor has to rely on. Banks may issue capital notes in order to cover short-term financing issues, such as being able to meet minimum capital requirements. Capital notes are typically not callable.

RELATED TERMS
  1. Unsecured Note

    A loan that is not secured by the issuer's assets. Unsecured ...
  2. Note

    A financial security that generally has a longer term than a ...
  3. Secured Note

    A type of loan that is backed by the borrower's assets. If a ...
  4. Unsecured Debt

    A loan not backed by an underlying asset. Unsecured debt includes ...
  5. Unsecured Loan

    A loan that is issued and supported only by the borrower's creditworthiness, ...
  6. Capital Markets

    Capital markets are markets for buying and selling equity and ...
Related Articles
  1. Investing

    Explaining Cost Of Capital

    Cost of capital is the cost of funds used to finance a business.
  2. Personal Finance

    What is an Unsecured Loan?

    An unsecured loan is based on the creditworthiness of the borrower, and has no collateral securing the loan.
  3. Markets

    Understanding Capital

    Capital has a variety of meanings, but it generally refers to financial resources.
  4. Markets

    Target Corp: WACC Analysis (TGT)

    Learn about the importance of capital structure when making investment decisions, and how Target's capital structure compares against the rest of the industry.
  5. Investing

    Evaluating A Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  6. Markets

    Gilead Stock: Capital Structure Analysis (GILD)

    Analyze the capital structure of Gilead Sciences to understand the impacts of debt and equity financing. Identify trends and the major drivers of those trends.
  7. Markets

    What is Capital Stock?

    Capital stock refers to the number of authorized shares a corporation may issue, both common and preferred.
  8. Investing

    Breaking Down Optimal Capital Structure

    An optimal capital structure shows the best balance of debt to equity a company can have in order to minimize its cost of capital.
  9. Investing

    Financial Markets: Capital Vs. Money Markets

    Two commonly used components of the financial market are money markets and capital markets. Find out the similarities and differences between them.
  10. Markets

    Twitter Stock: Capital Structure Analysis (TWTR)

    Analyze Twitter's capital structure to understand the importance of equity and debt financing. Identify trends in financial leverage and enterprise value.
RELATED FAQS
  1. What is the difference between secured and unsecured debt?

    Understand the difference between secured and unsecured debt and how the reliability and trustworthiness of the issuing entity ... Read Answer >>
  2. Does working capital include short-term debt?

    Learn about a company's working capital and how short-term debt is considered part of current liabilities and is included ... Read Answer >>
  3. How can I consolidate my unsecured debt?

    Discover some of the different ways that you can combine your present unsecured debts into a consolidation loan -- even by ... Read Answer >>
  4. How do interest rates influence a corporation's capital structure?

    Learn about how changing interest rates can affect a corporation's capital structure because of their impact on the cost ... Read Answer >>
  5. How is working capital different from fixed capital?

    Understand the differences between working capital and fixed capital, including definitions and examples of how businesses ... Read Answer >>
  6. What is the difference between secured and unsecured debts?

    Learn the differences between secured and unsecured debt; discover how banks buffer risks associated with each type of loan ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center