What is a Lender?

A lender is an entity that makes cash loans to other entities or individuals in exchange for either a fixed or variable interest rate and a promise of repayment. There are several options for the repayment of these loans, such as in accordance with a fixed monthly schedule or a lump sum payment that is due on the maturity date of the loan.

Lenders are needed for several reasons, including the following:

To provide funding for major purchases
To increase the amount of working capital funding
To provide a backup line of credit to support irregular cash flows

Lenders may choose to offer only certain types of loans, or to restrict their lending activities to certain types of entities. For example, a lender may specialize in mortgages to individuals, or lines of credit to businesses.