Floor plan loans finance equipment purchases in an arrangement similar to a revolving credit agreement. Many manufacturers or distributors of machine tools, tractors, and similar heavy equipment supply these items to retailers under a floor plan system, which allows the retailer to pay for the merchandise only after actually selling it. The retailer’s inventory therefore is financed by the supplier, either a manufacturer or a distributor. The manufacturer or distributor in turn finances this inventory by setting up a credit arrangement with a bank. Under such an arrangement, the bank pays the manufacturer for the equipment as soon as it is shipped. The bank then becomes the official owner of the equipment. When the equipment is sold, the retailer pays the wholesale price plus an interest charge directly to the bank. Alternatively, the retailer many give the manufacturer or distributor a note for the wholesale price of the equipment, which the manufacturer or distributor may then sell to the bank at a discount. This agreement compensates the bank, not by interest payments, but by the difference between the discounted sum it pays to the manufacturer and the full wholesale price it eventually will recover from the retailer.