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Long Term Debt Financing
usually applies to assets your business is purchasing,
such as equipment, buildings, land, or machinery. With
long term debt financing, the scheduled repayment of the
loan and the estimated useful life of the assets extends
over more than one year
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Short Term Debt Financing usually applies to money needed for the
day-to-day operations of the business, such as
purchasing inventory, supplies, or paying the wages of
employees. Short term financing is referred to as an
operating loan or short term loan because scheduled
repayment takes place in less than one year. A line of
credit is an example of short term debt financing. |
