​KembaraXtra – Legal Terms – Loan Capital


Loan capital refers to funds raised by a company through borrowing, typically by issuing debentures or similar financial instruments. These funds are not part of the company’s share capital but represent a debt owed to investors.


Investors who provide loan capital do not gain ownership rights in the company but instead receive interest payments. Their position is generally more secure than that of shareholders, particularly if the loan is secured against company assets.


Loan capital is commonly used by companies as a means of financing expansion or operations without diluting ownership. However, it also creates repayment obligations that must be managed carefully.