Question

Dimitium National Bank is well known for lending money to companies who need it as quickly as possible. Any company that takes money from the bank is required to return the amount within six months at an interest at a rate of 12 percent. Which of the following short-term financing options is being offered by Dimitium National Bank in the given scenario?

A. Trade credit
B. Factoring
C. Short-term bank loans
D. Bank debit

Answer 1

C. Short-term bank loans

Step-by-step explanation:

Dimitium National bank is giving short term loans to companies who need it.

Short-term loan is usually given to small business to support their finance. The interest rate on short-term loan are usually higher than long term loans and they have a maturity period of one year or less than a year.

Short-term loan as the name implies is a loan that is required to be paid within a short period of time compared to long-term loans that takes longer period. The maturity date could be as short as 60-120 days.

Short-term loan must be repaid within the stipulated period to the lender. It is used to purchase inventory and also fund some financial burdens.

In the case of Dimitium National bank, They require that the loan should be paid back within 6 months with 12% interest rate.

Answer 2

Answer: Short term bank loan

Step-by-step explanation:

A short term bank loan is a type of loan obtained to support a business capital or temporary personal need. It is a type of credit that involves a borrowed capital amount, in which interest is paid on the borrowed amount and the total amount is returned usually less than a year from obtaining the loan.

A short term loan is a vital option for small businesses which are not eligible to get loans from a bank. Short term can also be used by individuals who have a temporary financial problem.