Debt capital is the part of the total capital invested in the business that is raised through loans. The company has to repay the loan in the future date as per the agreement with the banks or investors. Debt Capital can be divided into two parts - long-term debt and short-term debt.
Top topics discussed in debt capital are as follows -
What is the difference between debt capital and equity capital?
What are the types of credit facilities?
What are the external sources of finance?
What is the money market?
What is Mezzanine Financing?
What is a subprime loan?
What is the difference between stock vs bonds?
What are callable bonds?
Difference between Lease vs Rent?
Debt vs Equity
Debt capial is a loan and the creditors can only claim the loaned amount plus the interest. Whereas Equity is sharing the ownership of the company with individuals which allow them to receive dividends & voting rights.
Letter of Credit LC is a written commitment to pay which is issued by a buyer’s or importer’s bank i.e. the issuing of LC from bank to the seller’s or exporter’s bank i.e. accepting bank, negotiating bank or paying the bank.
Mezzanine financing definition is nothing but a kind of financing that has both features of debt capital and equity financing that provides lenders the right to convert its loan into equity in case of a default (only after the private equity companies and other senior debts are paid off)
Subprime Loans or Subprime lending refers to the practice of issuing loans to those people who are financially backward or who have a higher probability of missing the repayment schedule due to various uncanny situations in business, work or life.
Mortgage banker is “an individual, firm or corporation that originates, sells or services loans secured by mortgages.” Whereas Mortgage Brokers is a broker as “an independent real estate financing professional that specializes in the origination of mortgages.”
Mortgagee and Mortgagor are the integral part of Loan Business which includes the transfer of funds to the required person/institution, pledging of assets to the lender by the receiver, costs like settlement costs, interest costs etc.