Legal Definitions - short-term loan

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.