Debt financing faces simpler risks than equity financing, mainly including guarantee risks and financial risks.

When a company borrows money from a bank, it must first find a company with certain financial strength to act as a guarantor and bear joint liability for the bank loan. When a private company looks for a guarantee company, you often agree to the other party's requirements. Providing guarantee for the other party for a bank loan is called mutual guarantee. A large amount of mutual guarantees can easily form a guarantee circle among companies. Once a company in the circle has operational problems, it may cause a chain reaction, causing other companies to face serious debt risks.

Financial risk mainly refers to problems with the company's asset-liability structure. When a company uses debt for financing, the increase in financial expenses will put great pressure on the company's operations. In theory, the company's net asset profitability If the borrowing interest rate cannot be reached, the company's borrowing will bring losses to the company's shareholders.