To which of the following does debt financing primarily refer?

Debt financing primarily refers to taking out loans to finance business operations. When a business opts for debt financing, it borrows funds from external sources, such as banks or financial institutions, with the obligation to repay the amount borrowed along with interest over a specified period. This method of financing allows businesses to access needed capital without giving up ownership control, as it does not involve selling equity in the company.

The other options describe different forms of financing. Seeking donations from friends and family is more aligned with equity financing, where support is provided without expectation of repayment. Using personal savings involves utilizing one’s own resources rather than borrowing, which does not constitute debt financing. Issuing stock in the company represents equity financing as it involves selling shares to raise capital, thus providing investors with ownership stakes in the business.