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Types Of Finance (Long Term (Buying a house ten years after graduation,…
Types Of Finance
Long Term
Buying a house ten years after graduation
Paying off all student loans within five years of graduation.
Government debt
Mortgages
Bonds or debentures .
Short Term
Trade Credit
Cash Credit.
Overdraft
Bank loan
Advantages for short term:
raising funds involving financial obligations that need to be repaid within a year or less. It is a fast and flexible way for companies to obtain working capital for their daily operations when their cash flow is insufficient.
Advantages for long term:
Based on their length, term loans are best for financing a business' long-term growth, and are generally used for purchasing assets that will not be converted to cash within a year.
Disadvantage for short term
disadvantage is that a company may become too reliant on short-term funds and vulnerable to high interest rates and banking fees.
Disadvantage for long term
Higher Interest Rates, Greater Interest Cost, Debt-to-Income Ratio, Slow Growth of Equity