In early 2010, an article in the Wall Street Journal described an increase in "vendor financing" to small businesses. With vendor financing, the suppliers, or vendors, to a small business make loans to the business beyond the usual short-term financing connected with the business's buying the vendor's product. For instance, a manufacturer of women's clothing might make a loan to a small boutique clothing store.
In early 2010, why might small businesses have been trying to borrow from their vendors rather than from banks?
What would be the advantages and disadvantages to a small business of borrowing from a vendor rather than from a bank?
What would be the advantages and disadvantages to the vendor of making the loan?