What distinguishes equity financing from debt financing provided by the IFC?

Equity financing is characterized primarily by the concept of ownership. When equity financing is utilized, investors provide capital to a company in exchange for ownership shares or a percentage in the firm. This means that equity investors participate in the company’s growth and profits, as they are essentially becoming partial owners of the business.

In contrast, debt financing involves borrowing capital that must be repaid over time, typically with interest. This creates an obligation for the company to repay the lender, without granting them any ownership stake in the business. As a result, debt holders do not share in the company's equity or potential profits beyond their agreed-upon interest rates.

The nature of having ownership (equity) versus managing a loan obligation (debt) is a fundamental distinction. While the other options touch on aspects of financing, they do not capture the essence of ownership, which is a defining feature of equity financing.