Debt Financing for Businesses

Debt Financing for Businesses

Debt financing is one of the ways companies raise funds to expand or improve their operations. It can be a good option for businesses that have a clear idea of what they need to accomplish and how much money is needed.

There are pros and cons to debt financing, so business leaders should weigh those carefully before committing any funds.


Debt financing is when a business borrows money from lenders to fund growth or expansion. It’s different than equity financing, which raises capital from investors rather than businesses.

In debt financing, the company owes the lender a sum of money, along with interest, and is expected to pay it back over time. Typically, there are two types of debt: secured and unsecured.

The first type is backed by assets, such as inventory or accounts receivable, and can be used for virtually any business goal, including purchasing new equipment. The …

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