debtfinanciering

Debtfinanciering, also known as debt financing or schuldfinanciering, is a method for businesses and individuals to raise capital by borrowing money. This borrowed money must be repaid at a later date, typically with interest. Unlike equity financing, where ownership is sold, debt financing involves taking on a liability.

There are various forms of debt financing. Common examples include bank loans, which can be secured by assets or unsecured. Businesses also utilize corporate bonds, where they issue debt instruments to investors. Lines of credit offer flexible access to funds, while mortgages are a specific type of secured debt for real estate purchases. Other forms include leases, factoring, and commercial paper.

The terms of debt financing, including the interest rate, repayment schedule, and any collateral requirements, are established in a loan agreement or indenture. The cost of debt financing is the interest paid on the borrowed amount. Companies often use debt financing to fund operations, expansion, or acquisitions, while individuals may use it for mortgages, car loans, or personal expenses. Proper management of debt is crucial to avoid financial distress.