Debt offering is a debt instrument offered for purchase by private investors – normally with warrants for future stock purchases at fixed prices. This is a way for companies to raise debt financing by selling notes with a set annual return rate and a schedule on when the full payment will be made to investors. This is very similar to a private business loan. Using a debt offering, a company can avoid giving up ownership or future profit in the business.
Debt financing is a direct contrast to equity financing where companies sell ownership stake in the company to raise funds. Equity financing allows companies to keep free of debt and keep their balance sheet clean of liabilities. Some owners would prefer keeping most if not all of the ownership stake in the company and do not mind recording debt on their balance sheet as long as it leaves other assets open to revenue generation. In this case a debt offering would be the best bet.
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