Suppose that, as a small business, you decide to buy a new copying machine. Since you cannot afford to pay cash, you finance the machine over 12 months. The copy machine itself will serve as loan collateral. The major source of credit is a(n)
A) investment company.
B) sales finance company.
C) venture capital firm.
D) consumer finance company.
E) factoring company.

Question

Quizplus · Accepted Answer

Sales finance companies specialize in financing the purchase of specific types of equipment, such as copy machines. The copy machine will serve as collateral, meaning that if you default on the loan, the finance company can repossess the machine. While other types of credit sources may also provide financing for equipment purchases, a sales finance company is the most likely choice in this scenario.

Suppose That, as a Small Business, You Decide to Buy