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Creditor

A person or institution that lends money to a business and expects repayment with interest.

A creditor's income is interest and a creditor's risk is nonpayment. A co-signer carries that risk without earning that interest.

Often Confused With

Investor
A creditor is owed a fixed repayment and is paid first; an investor owns a share, is paid last, and has no promised amount.
Lender
Lender and creditor describe the same role; creditor is the word the business statements use.

Taught In

See Also

3.5.C.1 · 3.5.C.2 · 3.5.C.6