Question

Topic: Types of short term credit(loan).

Please take care of using numerical examples in your study. The number of pages of your homework should be between 5 and 10 pages and the sources you use should be specified in the research in accordance with the research rules. In this assignment, please do not forget to include where are your sources from.

Answer 1

Types of Short Term Credit:

Short term credit is a loan taken to meet a temporary individual or business requirement and which has to be repaid generally within a span of 1 year.

1. Merchant cash advances: cash advance that actually operates like a loan.

2. Lines of credit: a type of business credit card with a credit limit/cap, with monthly instalments paid.

3. Invoice financing: lender gives the money and charges interest based on the time during which the invoices of the business remains outstanding

4. Payday Loans: emergency short term loans which are quite easy to get sanctioned, the entire principal and interest has to be repaid back in lump sum when the payday arrives

5. Online loans: these are also quite easy to obtain, from application to approval everything takes less time.

Sources: corporatefinanceinstitute.com, wikipedia

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