The shareholders of the enterprise are willing to give up part of the ownership of the enterprise and introduce new shareholders' financing by means of capital increase. The enterprise does not need to repay the principal and interest for the funds obtained from equity financing, but the new shareholders will share the profits of the enterprise in the same way as the old shareholders. The characteristics of equity financing determine that it can be applied extensively, and that it can not only increase the working capital of the enterprise but also be used for investment activities of the enterprise.
Enterprises borrow money for financing. The enterprise shall bear the interest of the funds obtained through debt financing, and repay the principal of the funds to creditors after the loan expires. The characteristics of debt financing determine that it is mainly used for solving the problem of working capital shortage for enterprises instead of for capital expenditure. Debt financing is classified into bank credit, non-government credit, bond financing, trust financing, project financing, commercial credit and leasing according to the financing channel.