Short tern Finance

Short term Finance

• It is when business raise money for finance for short term.
• It can be internal and external
• Short term finance is usually 1-2 years
• It is less risky for financer because it will be paid in short time
• It is used to cover day to day expenses

Internal Source of Finance

• It is the amount raised within business in order to fulfill financial need.
• Example of Internal source of finance can be:
• raising from employee contribution.
• Using savings
• Selling Shares

External Source of Finance

• It is when a business needs financial support from outside investor
• This amount must be paid on agreed time
• Example of external source of finance can be:
• Bank Loan
• Borrow from other company

Use of short term finance

• Short term finance is specially for small business owners
• Short term finance can be used for fulfill start up cost of a small firm