Why is Capital Crucial for a Company? Understanding the Role of Capital in Business

When looking at the requirements of a company, the first requirement is to have capital. But why is capital necessary? It's easy to understand that a company needs money to buy equipment, hire people, and purchase raw materials. However, why does this money have to be in the form of capital? Why can't it be borrowed?

In the past, we had a reform called 'subsidies to loans' where government subsidies were replaced with loans. However, after some time, it was discovered that a company cannot operate solely on loans. After 'subsidies to loans', we had 'debt-to-equity swaps'. Any company, whether it is a state-owned or private enterprise, needs its own capital. This capital is used to deal with uncertainty. Once the money is invested, it cannot be withdrawn. The invested money may or may not yield returns. If it does, the returns are distributed accordingly. If it doesn't, then it is considered a loss. This is known as capital, and it was invented by humans to deal with market uncertainty.