Business loans

fizzyt
fizzyt New MemberRegistered Posts: 6
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.

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  • sdv
    sdv Experienced Mentor Registered Posts: 585
    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
    fizzyt New Member Registered Posts: 6
    Thank you for that =)

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