Final answer:
A business in need of a short-term loan without a finance charge can seek trade credit from its suppliers. This kind of credit is typically available to businesses with good credit. Trade credit allows businesses to maintain operations without issuing bonds or stock, which would either incur regular interest payments or dilute ownership control.Thus, the correct answer is option B.
Step-by-step explanation:
If a business needs a short-term loan it could seek trade credit from its suppliers, which is usually available to all businesses with good credit and extended to the buyer without a finance charge. The correct answer is B) Trade Credit.
When a company needs to access financial capital, it has several options, such as bank loans, issuing bonds, or equity financing. A bank loan often works better for relatively small firms, as banks can monitor the business closely. On the other hand, relatively large and well-known firms often issue bonds to raise capital for various purposes like making investments or acquiring other firms. Yet, this is not an absolute rule, as sometimes smaller firms may also issue bonds, and banks can provide large loans to businesses as well.
Issuing stock is another form of financing but involves giving up some company ownership and control to shareholders. Borrowing from the bank or issuing bonds, while committing the firm to scheduled interest payments, allows the company to retain full control.