All financing is circular. This concern is beyond the pale contrived

Financing is circular because creating a liability for one party (debt) creates an asset for another (the bank) off of which more debt can be secured

A bank / financier sells trust and reassurance. They otherwise invent most money from thin air.

That’s not the point. The issue is that loaning/investing to a client so they can buy from you conflates your investments with your revenue.

It may be fine, or not. It it has been a frequent type of manipulation to obfuscate the real accounting situation.