Question

What is the difference between debt financing and equity financing?

Answer 1

Hello,

Debt financing refers to funds raised by borrowing (when going into debt), where as equality financing is raised by the firm (only by retained earnings), or by selling the ownership off to another person or company to venture capitalists or even issuing shares to other investors.

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Answer 2

Debt financing is obtaining money by selling bonds or financial notes. On the other hand, equity financing is the use of stock ownership to raise money by selling shares to investors.