Short-Term Loan

What is a Short-Term Loan?

A short-term loan is a type of financing that is scheduled to be repaid within a short period, typically less than a year. These loans are often used by businesses to cover immediate cash flow needs, manage unexpected expenses, or take advantage of short-term opportunities. Short-term loans usually have higher interest rates than long-term loans due to the quick repayment period.

Common Uses of Short-Term Loans

• Working Capital: Providing funds for day-to-day operational expenses.
• Emergency Expenses: Covering unexpected costs that arise.
• Inventory Purchases: Buying inventory to meet seasonal demand or bulk discounts.

Related Terms and Concepts

Line of credit, cash flow, interest rate, repayment period.