Principal
The principal on a loan is the original amount of money borrowed that needs to be repaid, excluding any interest, fees, or other financing charges. It is the base amount on which interest is calculated.
The borrower makes payments over the life of the loan, which usually consist of both principal and interest components, reducing the outstanding balance — the remaining principal amount at a given time that has not yet been paid off — until it’s zero.
For example, if a borrower has paid off $30,000 of a $100,000 loan, the outstanding balance is $70,000. The principal amount is $100,000.
The principal is a crucial component in understanding loan repayment, interest calculations, and the overall cost of borrowing.
Financial Glossary
Use Lighter Capital's glossary to understand common terms used in finance and investing, so you can build financial literacy and make informed decisions for your startup.
Principal
The principal on a loan is the original amount of money borrowed that needs to be repaid, excluding any interest, fees, or other financing charges. It is the base amount on which interest is calculated.
The borrower makes payments over the life of the loan, which usually consist of both principal and interest components, reducing the outstanding balance — the remaining principal amount at a given time that has not yet been paid off — until it’s zero.
For example, if a borrower has paid off $30,000 of a $100,000 loan, the outstanding balance is $70,000. The principal amount is $100,000.
The principal is a crucial component in understanding loan repayment, interest calculations, and the overall cost of borrowing.
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Lighter Capital's non-dilutive financing provides startups with a quick upfront injection of growth capital based on the business's recurring revenue streams. That means you get to keep your equity and control of the business, and your loan payments are right-sized to what the business can support. Our financing also scales with you as you grow. Apply online to find out how much you may qualify for.
