Business Valuation Glossary
Principal
Definition
The amount of a loan borrowed from a lender who expects the repayment of the principal over a period of time at a certain interest.
What It Means
Loan principal is the amount you borrow from a creditor who expects you to repay it, along with the interest, over the term of the loan. ValuAdder uses the Loan Schedule calculation to determine the periodic payments and the amortization schedule, which details the amounts of interest and principal reduction in each payment. Note that the business loan interest is a tax deductible expense.