What does bank debt typically include?

Bank debt generally encompasses various forms of borrowing through financial institutions and is not limited to a single type of loan. The correct answer highlights that bank debt includes loan capital, which can consist of both traditional loans and the provision of overdraft facilities. These features are essential for understanding the spectrum of financial products available through banks.

Loan capital refers to any borrowed funds that a business is obliged to repay, which can include different instruments such as term loans and lines of credit. Overdrafts are another critical component, allowing businesses to access additional funds beyond their account balance, thus providing flexibility in managing cash flow.

In contrast, focusing solely on loans from financial institutions restricts the definition and overlooks the broader range of financial products that can be classified under bank debt. Mortgages and real estate loans represent only a subset of the types of borrowings available, and considering only short-term borrowing excludes longer-term financing options that are also classified as bank debt. Therefore, understanding the comprehensive nature of bank debt, including both loan capital and overdrafts, is crucial for managing business finances effectively.