How is 'debt financing' best defined?

'Debt financing' is best defined as raising funds through borrowing, typically via loans or bonds. This method involves a borrower obtaining capital with the obligation to repay the borrowed amount, known as the principal, along with any agreed-upon interest over a specified period.

It is a common practice for businesses and governments to use debt financing to support operations, fund projects, or make significant investments without diluting ownership, unlike equity financing. When a company issues bonds or takes out loans, it incurs a liability but maintains control over its business operations.

In contrast, the other definitions do not accurately represent debt financing. Funding through equity investments involves selling ownership stakes, raising funds through savings accounts pertains more to personal or consumer finance, and funding through retained earnings relates to profits reinvested in the business rather than raised through borrowing.