Surf 'n' sun shop sells ski boats and other boating accessories. it receives most of its inventory about three months in advance of the summer season, but it is not able to pay for the inventory up front. instead, its suppliers allow surf 'n' sun to use its inventory as collateral. this type of agreement is called

This type of agreement is known as secured short-term financing. It is a short-term financing that has particular assets promised as collateral. Banks and financial institutions including insurance companies, finance companies, and the financial subsidiaries of big corporations are the main sources of secured short term financing.