Principal is a term that is commonly used in business and finance to refer to the total amount of assets, liabilities, and equity in an individual’s or company’s accounts. It also refers to the total funds available for investment, whether in stocks, bonds, real estate, or another asset class. In other words, it is the amount of money available for use in the company — both the capital at the start of the venture and the funds borrowed from external sources such as banks. Principal is important to understand for any business seeking to maximize returns on its investments and initiatives.