What is debt financing?
Debt financing is a way for businesses to get the capital that they need to open or to operate an existing business. Debt financing is when a person, business, bank or other entity provides capital to a business and the business has the obligation to pay back the principal on that loan plus an agreed upon rate of interest. Many businesses find that debt financing is advantageous because it provides needed capital while allowing the existing owners to maintain ownership and control of the business. Businesses who engage in debt financing may also be eligible for significant tax deductions. However, businesses need to be able to repay their loans according to the agreed upon repayment schedule in order to avoid negative consequences.
Search LawInfo's Business Law Resources
Additional Business Law FAQs
- What are the advantages of forming a Corporation?
- What steps should I take to start a business?
- What is Redemption?
- What is the Retail Installment Sales Financing Act?
- Do I need to develop terms and conditions for my business website?
- What is equity financing?
- What steps are required to form a corporation?
- What steps are required to form an LLC?
- How can I collect money that is owed to me by my customers?
- I want to do business online. Do I need to charge state sales tax?
- Does a contract have to be in writing in order to be enforceable?
- Do I need a license / permit to open my business?
- What benefits must I legally provide to my employees?
- Do I Need a Taxpayer Identification Number for my Business?
- What are the advantages of organizing a business as a Sole Proprietorship?
- What is a C Corporation?
- What is limited liabilty?
- What is an S Corporation?
- How often do I need to pay taxes?
- What are the advantages of a limited liability company (LLC)?
- Do I need business insurance?
- What are the advantages of a limited liability partnership (LLP)?
Business Law Sub-categories
Uniform Commercial Code