Funded Debt

DEFINITION of 'Funded Debt'

A company's debt, such as bonds, long-term notes payables or debentures that will mature in more than one year or one business cycle. This type of debt is classified as funded debt because it is funded by interest payments made by the borrowing firm over the term of the loan.

Funded debt is synonymous with "long-term debt".

BREAKING DOWN 'Funded Debt'

Funded debt is one form of financing a company can use to finance its long-term capital projects, such as the addition of a new product line or the expansion of operations. The firm may also use short-term financing to fund its long-term operations. This exposes the firm to a higher degree of interest rate and refinancing risk, but allows for more flexibility in its financing.

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