Omega Sales and Distribution Co. needs $600,000 for the 6-month period ending September 30, 2019. The firm has explored three possible sources of credit.

a. A loan from a microfinance organization pledged to accounts receivables, with an interest rate of 10 percent.

The microfinance organization has agreed to provide a loan that equals 80 percent of the total accounts receivables outstanding and charge an additional service fee of 2 percent on total accounts receivables.

b. A loan from a small bank that is pledged to inventories with an interest rate of 8 percent. A 3 percent service fee is required from total inventories and the bank agreed to issue a loan that is equal to 95 percent of total inventories.

c. A bank-secured loan using one of the warehouses as collateral. The bank has requested Omega to create insurance for the warehouse, which costs $1,000 per month, at an interest rate of 11 percent.

Which source of credit should Omega select? Explain.