DECA+ Business Management and Administration Practice Exam 2025 – All-in-One Guide to Guaranteed Success!

Debt financing is the correct choice because it specifically refers to the method of raising funds where a borrower receives money from a lender with the agreement to repay the borrowed amount, known as principal, along with additional interest over a specified period. This type of financing creates a liability for the borrower, as they are obligated to fulfill the terms of the loan agreement, making regular payments until the debt is fully repaid.

In contrast, equity financing involves raising capital by selling shares of the company, meaning investors gain ownership stakes rather than receiving fixed repayments. Venture capital is a form of equity financing where investors provide funds to early-stage companies in exchange for equity, often looking for high growth potential. Crowdfunding is a method that gathers small amounts of money from a large number of people, typically through online platforms, to fund a project or business, and does not involve a direct promise to repay like debt financing does.