Samantha Karp short term financing week 7

Samantha Karp short term financing week 7 - Companys that...

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Samantha Karp Short-Term Financing Short term financing sources consist of overdrafts, bank loans, and trade credit. Trade credits are loans that come in the form of goods. Trade credits are taken from one firm to benefit another. The amount of time the loan is granted for is between 15 days and 3 months. Bank overdrafts should be used to purchase something to keep the business going if there is no money in the bank. This arrangement from the bank roughly will last about 30 days or until the bank designates repayment. Bank loans are taken to finance major business needs. The banks will want repayment based upon your agreement.
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Unformatted text preview: Companys that are in need of money must choose the short term sources that best fit their needs. Trade credits however are one of the cheapest sources to obtain although might not be enough to meet the needs of the company. If the company needs a bit of a longer time to repay the money but still under the one year mark than the best option for that company would be a bank loan. The downside from getting the bank loan is that interest rates are much higher. Picking the right short term financing source all depends on what exactly the company is looking for....
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