Business loans

fizzyt

Hi...is there anyone out there who could clarify the difference (in time) between a short term loan and a long term loan.

Doing practice papers ready for June exam and the year end is september 2008, the loan needs to be paid in 2010 (Dec 08 past paper). Can you clarify if this would be classed as a short term or a long term loan please.

sdv

fizzyt wrote: »

Hi...is there anyone out there who could clarify the difference (in time) between a short term loan and a long term loan.

Doing practice papers ready for June exam and the year end is september 2008, the loan needs to be paid in 2010 (Dec 08 past paper). Can you clarify if this would be classed as a short term or a long term loan please.

for the purposes of FRA

short term loan is payable within a year and therefore classfied as current liabilities.
long term loan is payable after 12 months and therefore classfied as non-current liabilities.


for the puposes of Cash Management

short term loan is defined as a loan repayable within 5 years
medium term loan is defined as a loan payable between 5 and 15 years
long term loan is defined as a loan payable after 15 years

fizzyt

Thank you for that

I was referring to FRA so that helps me a load...thanks again