A
Debt Financing
Debt Financing
Image 1 When a firm raises money for working capital or for capital expenditures by selling bonds, bills or notes to individual or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay principal and interest on the debt.
Image 2 The other way of raising capital is to issue shares of stock in a public offering, called equity financing.


Bond

Creditor

Debt

Equity Financing