Based on corporate debt categories and the Herfindahl index, this paper constructs a debt-type concentration indicator for Chinese A-share non-financial listed firms over 2007 to 2022, and investigates its impact on total factor productivity as well as the underlying mechanisms. The result shows that high debt structure concentration significantly restrains the improvement of corporate total factor productivity. Mechanism research indicates that a diversified debt structure serves both financing and governance functions. On the one hand, high debt concentration increases corporate debt financing costs and financing constraints. On the other hand, it is associated with a higher likelihood of debt disputes and default risks, thereby lowering governance quality. Heterogeneity analyses indicate that a diversified debt structure mitigates governance failure stemming from weak trade credit environments and severe debt constraints. Moreover, macro-level creditor protection and firm-level executives’ financial backgrounds enhance the effectiveness of a diversified debt structure. Consequence tests demonstrate that the productivity-enhancing effects of heterogeneous debt structures improve both short-term and long-term corporate performance and growth potential, thereby reinforcing the practical explanatory power of the “debt heterogeneity” hypothesis.