Every business needs capital to operate, and capital financing is how companies raise funds and set up cash reserves in case of emergencies.
Capital Financing is an essential part of risk management as it provides solutions to companies in case the capital dries up.
There are two ways to carry out Capital Financing: Debt Financing and giving ownership of the company to investors (Equity Financing).
Under debt financing, an organization asks for money as a loan from an individual or a banking body to run its operations.
Under equity financing, an organization or corporation raises money by selling a particular ownership stake. The company launches its IPO and gets itself listed on NSE or BSE, allowing them to make its shares available for sale in the share market.