What is the difference between debt and equity business financing?

Debt financing means borrowing money that must be repaid with interest — loans, lines of credit, bonds. You retain full ownership of your business but have fixed repayment obligations. Equity financing means selling an ownership stake in your business to investors — venture capital, angel investors, crowdfunding. You receive capital without repayment obligations, but you give up partial ownership and control. Debt is generally preferred when you have strong cash flow to service payments and want to retain ownership. Equity is better for high-growth businesses that cannot yet service debt or need expertise and connections along with capital. Many businesses use a combination of both.