1. What is debt financing? There are two types of financing methods for enterprises: debt financing and equity financing.

Debt financing, also called bond financing, is a paid financing method that uses external funds of an enterprise.

Including: bank loans, bank short-term financing (bills, accounts receivable, letters of credit, etc.), corporate short-term financing bonds, corporate bonds, asset-backed medium and long-term bond financing, financial leasing, government discount loans, inter-governmental loans, world

Financial organization loans and private equity funds, etc.

2. Characteristics of debt financing (1) For funds obtained from debt financing, the enterprise must first bear the interest on the funds, and in addition must repay the principal of the funds to the bondholder after the loan matures.

(2) The characteristics of debt financing determine that its purpose is mainly to solve the problem of corporate working capital shortage, rather than for capital expenditures; equity financing means that the shareholders of the company are willing to give up part of the ownership of the company through the company's capital increase

Introducing new shareholder financing methods.

With the funds obtained from equity financing, the company does not need to repay principal and interest, but the new shareholders will share the company's profits and growth equally with the old shareholders.

The characteristics of equity financing determine its versatility. It can not only enrich the working capital of enterprises, but also be used for investment activities of enterprises.

1. Debt financing only obtains the right to use funds rather than ownership. The use of debt funds has costs. The enterprise must pay interest and return the principal when the debt matures.

2. Debt financing can increase the rate of return on corporate ownership funds and has a financial leverage effect.

3. Compared with equity financing, debt financing generally does not cause the issue of control over the enterprise, except that it may bring about the issue of creditor control and intervention in the enterprise in some specific circumstances. 4. Debt financing only obtains the right to use funds.

Rather than ownership, debt funds come at a cost; the business must pay interest and the principal must be returned when the debt matures.

5. Debt financing can increase the rate of return on corporate ownership funds and has a financial leverage effect.

6. Compared with equity financing, debt financing generally does not cause the issue of control of the enterprise, except that it may bring about the issue of creditor control and intervention in the enterprise in some specific circumstances.