Most potential business owners lack the necessary cash to launch a new enterprise. Along with using their own savings, they must seek funds from other sources. Debt financing does not lead to sharing ownership of your business with the financier.
Equity financing does.
However, the more debt there is in relation to equity, the higher the risk of failure since debt money is rented money and must be paid no matter how the business is doing. The raising of equity capital through the sale of stock is a complex and highly regulated matter which will require consultation with legal counsel. The raising of debt capital is less complicated. Three sources of debt capital are banks, venture capital firms, and the loan programs of federal and state governments. Lenders of debt capital to small businesses normally require detailed information from the prospective borrower.