Debt financing in entrepreneurship: a systematic literature review

Purpose This paper examines whether debt remains a viable and strategic financing option for entrepreneurs, through a systematic review of the literature on entrepreneurial debt financing. Design/methodology/approach A systematic literature review was conducted using the PRISMA protocol. Articles were retrieved from Scopus and Web of Science, resulting in 62 peer-reviewed journal publications from 1997 to 2024. Findings The findings highlight the dual nature of debt as both an enabler and a constraint for entrepreneurial ventures. Debt can support growth and ownership retention, but poses significant risks, particularly in environments with uncertainty, institutional weakness or low financial literacy. Financial literacy emerges as a cross-cutting factor. Research limitations/implications This study is limited to journal articles published in English and indexed in two databases, which may omit relevant studies from other sources. Future research could explore sector-specific or regional dynamics in greater depth and expand to alternative forms of entrepreneurial finance. Practical implications Entrepreneurs should align debt financing with their firm's maturity and financial capacity. Policymakers are encouraged to strengthen institutional frameworks and promote access through targeted programs. Improving financial literacy emerges as a key enabler of better financing decisions and debt management. Originality/value To the authors' knowledge, this is the first systematic literature review that explicitly focuses on the role of debt in entrepreneurial finance. By synthesizing empirical and conceptual studies, the paper offers a comprehensive framework and identifies underexplored areas for future research.