Long-term Debt

Long-term debt includes any loans or financial obligations that a company must repay after more than one year. This includes bank loans, bonds issued, mortgages, and lease obligations that extend beyond 12 months.

For example, if a company takes a $5 million bank loan with a 10-year repayment schedule, that is long-term debt. It appears under non-current liabilities on the balance sheet.

Companies use long-term debt to finance major investments — new factories, equipment, or acquisitions. While it provides capital for growth, too much debt increases financial risk and interest costs.