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What is a cash infusion?

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Quick Answer

A cash or capital infusion is a sudden, impacting cash distribution to an organization from stakeholders that are affected by the organization's activities. A primary example is when a start-up company or one struggling to grow receives a cash infusion from an investor hoping to profit from the business' success.

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Owners of a new company may also infuse some of their own cash into a business to help it grow. Partners in a new company may agree to each put in $50,000 of their own money as a capital infusion to help stabilize or grow the company. This approach allows the owners to maintain greater control and financial interest relative to seeking an infusion from outside investors. If the infusion sparks growth and profit, the owners receive greater earnings this way.

Cash infusions can also occur in the public sector. A city, state or federal government may support the buildup of a community infrastructure with a cash infusion. In this case, the government agrees to allocate funds to the particular agency or department that oversees the project or development. The goal of this type of cash infusion is to benefit citizens in the areas affected. Public cash infusions are typically supported from tax revenue received by the government.

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