2 min read
Definition
Interest capitalisation happens when accrued interest that has not been paid is added to the outstanding capital. From then on, interest is charged on the bigger balance — the essence of compounding. It is common during payment holidays and interest roll-up facilities.
In plain terms
Unpaid interest does not just wait — it joins the debt and starts costing you interest of its own.
Why it matters for your company
Watch capitalisation on any deferred or rolled-up facility — it accelerates the balance. See rolled-up interest and payment holiday interest.
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Read →Funding for UK limited companies
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