MGT225 Entrepreneurship And Enterprise Development

Entrepreneurship And Enterprise DevelopmentTU Board 2076

Mention any two sources of short term loan for ventures.

2

Answer

Short-term loans are essential for ventures to manage working capital and operational expenses. Here are two key sources of short-term loans:

  1. Trade Credit Suppliers often provide short-term credit to businesses, allowing them to purchase goods or services on credit (e.g., 30–90 days). This is interest-free if paid within the discount period, reducing immediate cash outflows.

  2. Bank Overdraft Facility Banks offer overdrafts, enabling businesses to withdraw more funds than they have in their account (up to a pre-approved limit). Interest is charged only on the amount overdrawn, making it flexible for temporary liquidity needs.

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