Debt financing is getting a loan. The most common sources of debt financing are commercial banks and Small Business Administration (SBA) guaranteed loans. The types of bank loans and SBA guaranteed loans available to entrepreneurs. Money “loaned” to an entrepreneur or business venture that must be repaid with interest at some point in time. The obligation to pay is usually secured by property or equipment bought by the business, or by the entrepreneur's personal assets. Banks are not investors. As a result, bankers are interested in minimizing risk, properly collateralizing loans, and repayment, as opposed to return on investment and capital gains.
Debt financing is the borrowed funds that entrepreneurs must repay.