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Debt Financing

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Dictionary Says

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.
Investopedia Says

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.

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