Debt financing is a way for businesses or individuals to raise money by borrowing. This can involve taking out loans from banks or issuing bonds to investors. The borrower agrees to pay back the borrowed amount, known as the principal, along with interest over a specified period. This method allows them to access funds without giving up ownership or control of their business. When a company uses debt financing, it can invest in growth opportunities, such as expanding operations or launching new products. However, it also means that the company must manage its cash flow carefully to ensure it can meet its repayment obligations on time.