Debt Financing Market Size

Global Debt Financing Market size was valued at USD 19.9 billion in 2023 and is poised to grow from USD 22.1 billion in 2024 to USD 51.7 billion by 2032, growing at a CAGR of 11.2% during the forecast period (2025-2032).

The availability of non-diluting financing option drives the growth of the market. In May 2025, Savara Inc., a biopharmaceutical company, announced a loan and security agreement with Hercules Capital, Inc. for up to USD 200 million. The non-diluting debt financing covers initial draw of USD 30 million, which will be used for refinance Savara’s existing debt facility.

In addition, in November 2023, Click Therapeutics, Inc. one of the leading Digital Therapeutics, announced that it has closed on a USD 20 million term loan from HSBC innovation banking. The term loan was partially drawn at closing, which is used to retire Click’s previous term loan. The undrawn balance remains fully available in order to help advance Click’s prescription digital therapeutic pipeline. Thus, increasing access to strategic debt financing solutions propel the growth of the market.

Further, the increasing demand for alternative and flexible financing options is one of the major factors for the growth of the market. In addition, the shift toward digital lending platforms and the increasing emphasis on ESG compliance among the investor and borrowers propel the growth of the market. The debt financing solutions such as social bonds, green bonds, and revenue-based financing are gaining popularity across various regions, catering to evolving corporate strategies.

Moreover, the increasing integration of AI, big data analytics and blockchain is elevating debt financing from traditional loan products to highly customized, efficient funding solutions.

The limited financial strength of companies to meet debt obligations acts as a restraining factor. For example, only a minority of companies (40%) are financially strong enough to meet their debt obligations (i.e., to generate enough profits to comfortably pay interest and principal). This suggests that 60% of companies are at risk of struggling with debt repayments if conditions worsen.

How AI is Enhancing Innovation and Sustainability in Debt Financing?

Artificial intelligence is revolutionizing the dept financing sector by optimizing loan origination processes, enable more accurate risk assessment and also offer real-time analysis into borrower behaviour. The AI driven tools allow the financial institute to streamline their operations by decreasing the operation cost and enhancing customer engagement through personalized financing solutions. In 2023, Tavant, one of the digital lending solutions providers, announced the launch of a highly anticipated new product, Asset Analysis, to Touchless Lending, an AI-powered digital lending platform.

AI-based predictive analytics is also used in order to optimize loan portfolio management. In 2024, FinTech solution partner with a global bank in order to integrate AI tools for analysing borrower behaviour and market trends. These AI driven analysis lead to decrease in 15% reduction in loan default rates and 20% increase in capital allocation efficiency, which align with the industry goal of sustainability and financial inclusion.