There are three types of capital, Fixed Capital, Circulating Capital and Free Capital. The First one is the (1) Fixed Capital, this capital is good to have in a particular business. Because this capital refers to permanent things or things that we owned and has value. This thing that we have is called "Collateral". Collateral are the things that we can be proud of having it. We can use this things to have a fixed capital. For example, I have a business and I need to borrow money from bank and have a fixed capital. I have my own land,cars, and buildings. This things I can used as collateral and I will have a money for my capital. This example can be used in loaning from a bank. Bank is always looking for collateral or things that have value on it.So if the owner of the business cannot return and pay that he(or she) loan, his(or her) collateral will be taken of the bank.
The second type of capital is (2) Circulating capital . This capital is taking risk. The capital goods that are use is only once or sometimes, no more. For example, I have a business, "Drinking water Supply" . I am supplying drinking water in our village. Then, my capital is only just enough for the half of people in our village. Then, all of a sudden, all people in our village buy from my business some supply of drinking waters. Now, I need to get from my capital to supply the water that I need for my business. The capital circulates, when they buy again from me, I will earn again and put it on my capital. This is an example of circulating capital, it means that when something is gone, you need to replace it and replenish.
The last type of capital is (3) Free Capital. For me, this is the best capital among the two. Because this type of capital is easy to have, but you need to take the risk. This type of capital is common. The best example for having this capital is having a business like "JUNK-SHOP". Because you will have a free capital by buying and selling plastic bottles and any other recyclable things. So for me, if I will have a business. I will choose this type of capital. These are the three different types of Capital.
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