Question

Why business concerns require short term finance?

Answer 1

Short-term finance refers to financing needs for a small period normally less than a year. In businesses, it is also known as working capital financing. This type of financing is normally needed because of the uneven flow of cash into the business, the seasonal pattern of business, etc. It refers to funds needed to meet day-to-day requirements and for holding stocks of raw materials, spare parts, etc. to be used for current operations.