Short-term Debt

Short-term debt refers to any type of debt that is due to be repaid within one year or less. This type of debt is often used by businesses to cover short-term expenses or to fund day-to-day operations. Examples of short-term debt include:

  1. Trade credit: This is when a business buys goods or services on credit from a supplier and agrees to pay the supplier back within a specified period of time.
  2. Short-term loans: These are loans that are due to be repaid within a year or less. They can be obtained from banks, credit unions, or other financial institutions.
  3. Lines of credit: This is a type of loan that provides a business with access to funds that can be drawn upon as needed. The business only pays interest on the amount that is borrowed.

Short-term debt can be a useful tool for businesses, but it can also be risky if not managed properly. Because short-term debt must be repaid quickly, businesses must have a plan in place for how they will generate the cash needed to pay it back. If a business is