What is the term for borrowed funds that entrepreneurs are obligated to repay?

The term for borrowed funds that entrepreneurs are obligated to repay is "debt financing." This form of financing involves a legal obligation to repay the borrowed amount, typically with interest, over a specified period. Entrepreneurs often seek debt financing through loans, bonds, or credit lines, which provide them with the necessary capital to start or grow their businesses. Unlike equity financing, where investors receive ownership stakes in exchange for their investment, debt financing does not dilute the owner's equity; however, it does create a financial obligation that the entrepreneur must meet, regardless of the business's performance.

Understanding debt financing is crucial for entrepreneurs, as it influences cash flow management and financial planning. It also impacts the overall risk and return profile of the business, which can have significant implications for future investment and growth strategies.