The so-called debt financing refers to the financing of enterprises through borrowing. The enterprise must bear the interest of the funds first, and repay the principal of the funds to the creditors after the loan expires. The characteristics of debt financing determine that its purpose is mainly to solve the problem of working capital shortage of enterprises, rather than spending under capital.

Debt financing, also known as bond financing, is a financing method for enterprises to use external funds for compensation. Including: bank loans, short-term bank financing (bills, accounts receivable, letters of credit, etc. ), short-term corporate financing bonds, asset-backed medium-and long-term bond financing, financial leasing, government discount loans, intergovernmental loans, loans from world financial organizations and private debt fund loans.

Article 15 of the Securities Law of People's Republic of China (PRC) shall meet the following conditions for public issuance of corporate bonds:

(1) Having a sound organizational structure; (2) The average distributable profit in the last three years is enough to pay the interest of corporate bonds for one year; (3) Other conditions stipulated by the State Council.

The funds raised by the public offering of corporate bonds must be used in accordance with the purposes listed in the Measures for Raising Corporate Bonds, and a resolution shall be made by the bondholders' meeting. The funds raised from the public offering of corporate bonds shall not be used to cover losses and unproductive expenditures.

When a listed company issues corporate bonds that can be converted into shares, it shall comply with the provisions of the second paragraph of Article 12 of this Law in addition to the conditions stipulated in the first paragraph. However, according to the way of raising corporate bonds, unless a listed company converts corporate bonds by buying its own shares.