 TITLE: What Is Debt Financing? CONTENT: How Does Debt Financing Work?\n-----------------------------\nDebt financing simply means borrowing money for the benefit of your business. You agree to repay the money with interest, just as you would with a personal or home loan. Although you may be able to finance some business expenses with your existing credit cards or loans from friends and family, most often debt financing means taking out a business loan.\nLearning how to get a business loan takes a bit of homework and preparation. If you're ready to dive in, these three steps can get you started:\n1.  Make a business plan. You need to convey the viability of your business—and your future prospects—to lenders with a formalized business plan. You also need to quantify how much money you need and for what. A business plan helps you clarify your needs, your goals and your route to profitability.\n2.  Consider different types of loans. Business loans take many different forms. Common types include:\n*   Bank loans\n*   U.S. Small Business Administration (SBA) loans\n*   Business lines of credit\n*   Equipment loans\n*   Invoice financing or accounts receivable financing\n*   Merchant cash advances\n4.  Mind your credit. As with any type of loan or credit, loans to help finance your business rely on your credit score and credit report to determine your creditworthiness—and the interest rate and terms you'll get. If you have an established business, you may have built business credit over the years. If not, your personal credit score and report may help bolster your case for getting a loan. Be aware that if you do use a personal guarantee to secure a business loan, your personal credit—along with any personal assets you use as collateral—may be at stake if you have trouble repaying your debt. END