What is direct and indirect borrowing?

Direct borrowing occurs when an individual or entity borrows funds directly from a lender, such as a bank or financial institution, often through loans or credit lines. Indirect borrowing, on the other hand, involves obtaining funds through intermediaries, such as brokers or financial markets, where the borrower may not directly interact with the lender. This can include issuing bonds or obtaining loans from third parties. Both methods serve to meet financing needs, but they differ in terms of structure and the parties involved.