Lender financing occurs when a business establishes trade credit with the lender.

Question

Quizplus · Accepted Answer

Lender financing, also known as debt financing, refers to borrowing funds from a lender such as a bank or a financial institution. Trade credit, on the other hand, is an agreement between a supplier and a buyer to delay payment for goods or services received. Therefore, establishing trade credit with a lender is not an accurate description of lender financing.

Lender Financing Occurs When a Business Establishes Trade Credit with the Lender