Tag Archives: capital expenditures

Definition of ‘Debt Financing’

 

When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid.
9088d-1487349_439244106201841_2132384116_n

Investopedia explains ‘Debt Financing’

The other way of raising capital is to issue shares of stock in a public offering. This is called equity financing.