Which type of capital is provided by a company's owners?

Equity capital is the type of capital provided by a company's owners, representing their ownership stake in the business. This form of capital comes from investments made by the owners, such as founders or shareholders, often in the form of cash, assets, or other resources. When owners invest in equity, they are essentially buying a portion of the company and expecting to receive returns on that investment through dividends or increasing the value of their shares over time.

Equity capital is vital because it helps companies fund various activities, such as expansion, operational improvements, or new projects, without the obligation to repay like debt capital would require. Owners bear the risk of their investment, and unlike debt financing, there are no fixed repayment schedules associated with equity, allowing the company greater flexibility in cash flow management.

In contrast, types of capital such as unsecured, credit, or debt are sources of funds that involve borrowings and obligations that need to be repaid, often with interest, and are not tied directly to ownership in the company.