Debt Finance

Debt finance is funds a business borrows, typically through loans or issuing bonds, which must be repaid with interest over time. It allows companies to raise capital for growth or operations without giving up ownership, but it also creates a financial obligation. The borrower agrees to pay back the principal amount borrowed along with agreed-upon interest, usually on a regular schedule. Debt finance can be beneficial as it preserves ownership and can offer tax advantages, but it requires careful management to ensure the company can meet its repayment commitments without jeopardizing its financial stability.