The biggest drawback of employing debt financing is that it can have difficulties paying back what it owes, and you run the risk of having your company taken away or having your assets liquidated to satisfy creditors.
Debt financing has a significant drawback in that it can be expensive, including interest charges, and may not be practical when you require smaller amounts of money for brief periods of time. For instance, taking on credit card debt only makes sense if you have the extra cash on hand to pay it off immediately or within a reasonable amount of time. When your company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is low, you risk paying extremely high interest rates and other fees because any loans you take out will require significant monthly interest payments, which may prevent you from making the capital investments required to grow your business. This might seriously damage your finances.
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