 TITLE: What Is Debt Financing? CONTENT: Pros and Cons of Debt Financing\n-------------------------------\nDebt financing has both positives and negatives for businesses in need of a cash infusion. Among the reasons to consider taking on debt to build your business:\n*   **You retain control.** Compared with equity financing—which involves selling off a partial stake in your company to investors—debt financing allows you to retain control of your business. Your lender has no say in how you run your operations, and once your loan is paid back, your relationship with the lender is over.\n*   **Interest rates may be favorable now.** Although interest rates fluctuate and every loan situation is different, interest rates are low at the time of this writing. Your chances of getting a loan at a favorable rate in this environment are relatively good.\n*   **Interest on business debt may be tax deductible,** though principal payments toward your debt are not. Business debt includes any business loans or lines of credit, business credit cards, and mortgage or vehicle loans used for property and cars used in your business.\nOn the downside, debt payments can put a drag on your cash flow. You'll need to keep up with your payments, regardless of how your business is doing. Before you take on any business debt, make sure you have a clear idea of how you'll use the cash for your business and how you'll pay the loan back over time. END