Debt Financing

The debt financing (Debt Financing) is a method of raising capital where a company borrows money from investors or financial institutions, with a commitment to repay this sum, often with interest, over a given period of time. Unlike equity financing, where investors get shares in the business, here they lend money without becoming owners. This type of financing includes bank loans, bonds, or credit lines. One of the main advantages of debt financing is that the owners of the business maintain full control because they do not transfer shares of capital. However, the company must ensure that it has enough liquidity to repay its debts, otherwise it will run into financial difficulties or even go bankrupt. This financing is often used for short or medium term projects, such as the purchase of equipment or expansion.

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