Debt Financing

Business, Legal & Accounting Glossary

Definition: Debt Financing


Debt Financing

Quick Summary of Debt Financing


Financing by selling bonds, bills or notes to individuals or institutions.




Full Definition of Debt Financing


Debt financing refers to the borrowing of funds in order to finance a purchase, acquisition or expansion. Debt financing applies to both individuals as well as to businesses and corporations. For businesses and corporations debt financing often involves the selling of notes, bonds, mortgages or other debt instruments. The individuals and financial institutions which provide the debt financing become creditors. Since debt financing involves borrowed funds, debt financing must be repaid, typically in instalments and with interest. The interest that must be paid on debt financing is determined by the creditworthiness of the borrower, the intended use of the funds, and by the current financial climate. Businesses and corporations find debt financing attractive because the interest paid is tax-deductible. The opposite of debt financing is equity financing.


Examples of Debt Financing in a sentence


The debt financing was a wise strategy to leverage the company was we were able to use the funds optimally.

We had to practice some debt financing, which was important for us and allowed us to do different things in our business.

My boss was confident that we would be able to use debt financing to fund our new acquisition, and asked me to find some banks who would be wiling to buy our bonds or notes.


Related Phrases


EBITDA
EBIDTA
permanent financing
internal measure
Earnings Before Interest, Taxes, Depreciation and Amortization
irrelevance result
equity financing
bankruptcy cost view
equity ratio


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March 28, 2024 https://payrollheaven.com/define/debt-financing/.
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Debt Financing. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/debt-financing/ (accessed: March 28, 2024).
American Psychological Association (APA):
Debt Financing. PayrollHeaven.com. Retrieved March 28, 2024
, from PayrollHeaven.com website: https://payrollheaven.com/define/debt-financing/

Definition Sources


Definitions for Debt Financing are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 29th October, 2021 | 0 Views.