Who is the Borrower?

Who is the Borrower?

• A. The person who lends funds
• B. The person who receives money with the obligation to repay
• C. The guarantor
• D. The trustee

Answer: (B)

The main idea is identifying who holds the obligation to repay in a loan. The borrower is the party who receives the funds and signs the agreement, creating the primary debt that must be repaid to the lender. The lender is the one providing the money. A guarantor is someone who promises to repay if the borrower defaults, but they are not the primary recipient of the funds or the main obligor. A trustee, meanwhile, is a person who holds assets on behalf of beneficiaries within a trust, not the debtor in a lending arrangement. In due diligence, knowing who the borrower is helps focus on who bears the repayment risk and whose funds and activities need to be verified.