Which term refers to the process of using borrowed funds to finance a business?

The term that describes the process of using borrowed funds to finance a business is debt financing. This involves acquiring funds from external sources, such as loans or bonds, which the business is obligated to repay with interest over time. Debt financing allows a company to leverage additional capital to fund its operations, invest in new projects, or manage cash flow without diluting ownership through equity financing.

The other terms in the choices relate to different aspects of business finance. Operating activities refer to the primary revenue-generating activities of the business, such as selling goods or services. Equity financing involves raising funds by selling ownership stakes in the business, typically in the form of stock. Liabilities are broader and encompass all obligations or debts the company owes, which can include both borrowed funds and other types of financial obligations. Thus, debt financing specifically refers to the strategy of raising capital through borrowing, distinguishing it from other financing methods.