Debt Financing for Startups – Espresso Capital
Debt Financing for Startups: A Comprehensive Guide Starting and scaling a business requires capital , and while equity financing often gets the spotlight, debt financing can be a strategic and less dilutive way for startups to fund their growth. Debt financing involves borrowing funds that must be repaid over time, usually with interest. Unlike equity financing, where investors take ownership in exchange for capital, debt financing allows founders to retain control over their business. In this guide, we will explore debt financing for startups, its advantages and risks, different types, and how to determine if it’s the right choice for your business. What is Debt Financing? Debt financing is the process of raising funds for a business by borrowing money from banks, venture debt firms, or alternative lenders. In exchange, the borrower agrees to repay the principal amount along with interest over a predetermined period. The key characteristic of debt financing is that it does...