Funds available for a period of less than one year are called short-term funds. Short-term financing is usually not included in the capital structure of a project as it is usually considered working capital and used for the day to day operations and not as a source of capital financing. However, it has been included in this report as it may be an acceptable source of financing for smaller short term projects.
• Supplier Credit
Supplier credit, or trade credit as it is sometimes referred to, is a source of financing provided by suppliers for short-term periods usually 10, 30 or 90 days.
• Line of Credit
A line of credit is a loan arrangement between a financial institution, usually a bank, and the borrower. It can either be secured or unsecured and allows the borrower to borrow up to a pre-specified amount. The borrower can also borrow and payback the funds as needed, and interest will only be charged on the funds borrowed. A line of credit is only used for day-to-day operational financial needs rather than capital requirements.