Subordinated equity is financing that, unlike paid-in capital and retained earnings, remains in a company for an extended period of time and acts as a source of capital. This capital resembles equity in that it has a long maturity and is usually repaid only after all other creditors have been satisfied. Examples of subordinated equity are subordinated loans, convertible bonds, and mezzanine financing. It is also referred to as quasi equity because of its similarities to equity.

This type of financing is important in situations where a company needs additional capital, but the risks to lenders are higher, requiring a higher interest rate or converting the loan to equity under certain conditions.