Funded Debt: Everything You Need To Know

What is Funded Debt?

As the borrowing firm, you pay for a loan with interest payments to the lender over the term of the loan. You report this as debt that was funded—hence, funded debt.

Understanding Funded Debt

Funded debt usually pays for a long-term project. It usually comes with interest, which is the income for the lender. As the borrower, this is a conservative method of raising capital for your company because generally the interest rate is locked.

Funded Debt Examples

• Bonds that mature after one year, one business cycle or longer
• Convertible bonds
• Debentures
• Long-term notes payables

Your funded debt is included in leverage ratio calculations, also known as capitalization ratios.

Monitor your funded debt with this free Monthly Balance Sheet Template for Excel

Your debts are classified as funded or unfunded. While funded debt matures after more than one year or one reporting cycle, unfunded debt are the debts your business needs to pay off in one year or less..