What Is a Principal in a Business ?

What Is a Principal in a Business ?

"Principal" has many meanings in business terms, states Investopedia. Principal indicates the amount borrowed or amount still owed in a loan, separate from interest. It also refers to the original amount invested, separate from earnings. Another common definition for principal is the owner of a private company.

The context of the term is important to know in business as the exact meaning has many variations. Some individuals refer to principal as "corpus." Principal can also mean the face value of a bond. Also, principal may mean the main party to a transaction that acts as a buyer or seller in his own account and risk.