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Simple English definitions for legal terms
short-term loan
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A quick definition of short-term loan:
A short-term loan is when someone borrows money for a short period of time, usually a few weeks or months. This type of loan is often used for emergencies or unexpected expenses. The borrower must pay back the loan with interest within the agreed-upon timeframe.
A more thorough explanation:
A short-term loan is a type of loan that is meant to be paid back within a short period of time, usually within a year or less. These loans are often used to cover unexpected expenses or to bridge a gap in cash flow.
- A business takes out a short-term loan to cover the cost of inventory for the holiday season.
- An individual takes out a short-term loan to pay for car repairs.
These examples illustrate how short-term loans can be used to cover unexpected expenses or to bridge a gap in cash flow. They are meant to be paid back quickly, so they are often used for smaller amounts of money.