What term describes the interest paid by a business on borrowed money?

The term that describes the interest paid by a business on borrowed money is "Finance cost." This reflects the cost of financing through debt, highlighting the expenses a business incurs when obtaining funds. Interest payments are considered a finance cost because they represent the additional amount that a business must pay on top of the principal borrowed, calculated as a percentage of the outstanding loan. Businesses typically record these costs in their financial statements to accurately depict their overall financial health and profitability.

Other terms such as finance income refer to the income received from financial assets rather than expenses incurred from borrowing. Debt interest specifically focuses on the interest itself, but it lacks the broader context of all financing costs. Loan repayment encompasses the total obligation to pay back both the principal and interest, making it less specific than finance cost when discussing the particular expense of interest.