Corporate Bond

money · business · investing

Companies borrow money. When a company needs cash for big projects like building a new factory or buying another business, they can borrow from regular people and investors by selling corporate bonds instead of asking a bank for a loan.

It's a written promise. A corporate bond is a formal agreement where the company says exactly how much they borrowed, when they'll pay you back, and how much interest you'll earn on your money while you wait.

Longer than a year. Corporate bonds are long-term loans that take months or years to repay, which is different from commercial paper (short-term borrowing that companies pay back within one year).

You earn interest. When you buy a corporate bond, the company pays you regular interest payments before giving back your original money at the end, which is how you make money from lending to a business.