Difference Between Short Term Borrowing and Long Term Borrowing

The difference between short-term borrowing and long-term borrowing is that short-term borrowing refers to corporate borrowing that is not more than one year. Whereas, long-term borrowing is borrowing more than one year. Their main difference is the term of the loan.

Those that are less than one year are called short-term loans, and those that are more than one year are called long-term loans.

It is the length of the date, generally less than a year of short-term borrowing. More than 10 years is a long-term loan.

Hello! Short-term loans with a loan term of less than one year and long-term loans with a loan term of more than one year are considered long-term loans. Interest is generally not accrued on short-term loans, and interest must be accrued on long-term loans. Thanks for reading!

Short-term borrowings are generally less than one year, and the interest can be directly treated as a financial expense.

Borrow: Finance Expenses.

Credit: Bank deposits.

The new accounting standards no longer include the account of withholding expenses, which are directly included in financial expenses.

The long-term loan period is generally more than one year, and the interest on the long-term loan should be appropriately included in the cost or expense according to the project used and the nature of the company used.

For example, real estate development requires a lot of funds, and the loan is often more than one year, and its interest is included in the development cost loan: development cost - interest.

Credit: Interest payable.

For example, for construction enterprises, the project is also long, and the interest is included in the loan of the project under construction; Construction in progress.

Credit: Interest payable.

The same account, because of different projects, different nature of enterprises, there are different accounting treatments, which need to be used flexibly.

1.Long-term borrowings refer to debts with a repayment period of more than one year or more than one business cycle, mainly including long-term borrowings, corporate bonds, long-term payables, special payables and other long-term liabilities.

Short-term borrowings refer to all kinds of borrowings borrowed from banks or other financial institutions and other foreign units with a repayment period of less than one year (including one year) for the funds required by enterprises to maintain normal production and operation or to repay certain debts. Short-term borrowings mainly include operating turnover loans, temporary borrowings, settlement borrowings, bill discount borrowings, seller's credits, pre-purchase deposit borrowings and special reserve borrowings.

2.Long-term loans have high interest rates due to relatively long borrowing periods; Low interest rates on short-term borrowing.

3.The impact on the cash flow of the enterprise is different, and the risk that the enterprise bears for it is different.

The difference between short-term borrowing and long-term borrowing is that short-term borrowing within one year and long-term borrowing for more than one year; Short-term borrowings account for only the principal, while long-term borrowings account for both the principal of borrowings and the adjustment of interest expense.

Long-term borrowing is one of the main funds in project investment. An investment project requires a large amount of capital, and it is often not enough to rely on its own good capital, and it is necessary to borrow from outside. Short-term loans refer to all kinds of loans borrowed by enterprises from banks or other financial institutions with a repayment period of less than one year according to the needs of production and operation, including production turnover loans, temporary loans, etc.

Short-term loans refer to all kinds of loans borrowed by enterprises from banks or other financial institutions with a repayment period of less than one year according to the needs of production and operation, including production turnover loans, temporary loans, etc.

The opposite is long-term borrowing. In China's accounting practice, short-term borrowings refer to all kinds of borrowings borrowed from banks or other financial institutions and other foreign entities with a repayment period of less than one year (including one year) for the funds required by an enterprise to maintain normal production and operation or to settle a certain debt. Short-term borrowings mainly include operating turnover loans, temporary borrowings, settlement borrowings, bill discount borrowings, seller's credits, pre-purchase wide-ranging deposit borrowings and special reserve borrowings.

Long-term borrowing is one of the main funds in project investment**. An investment project requires a large amount of capital, and its own funds alone are often not enough, and it is necessary to borrow from outside. Long-term borrowing generally comes from domestic banks and international development institutions.

A "corporate bond" is a company's basic long-term debt**, which is a long-term promissory note with a term of 10 years or more. Important matters such as repayment of principal and interest and the form of guarantee are stipulated in the trust deed.

Long-term borrowing should be financed to the extent that the enterprise lacks to make long-term investments, as the cost of long-term borrowing is higher and borrowing should be minimized, except for some international institutions. In addition to swapping new debts for old debts, the repayment of long-term borrowings can be carried out on a regular basis, which can be done in two general ways: debt repayment** and instalments. When borrowing for long-term loans, policymakers should fully consider the expected cash flow of investment projects and changes in future interest rates in order to obtain lower financing costs.

Short-term borrowing and long-term borrowing are two different forms of borrowing, and there are obvious differences between them in terms of borrowing term, interest rate, loan type, repayment method, etc. Short-term borrowings have a shorter term and lower interest rates, which refer to borrowings with a maturity of less than one year, mainly used to meet short-term funding needs; Long-term borrowing has a longer term and higher interest rate, and refers to borrowing with a maturity of more than one year, which is mainly used to meet long-term funding needs. This article explains in detail the differences between short-term borrowing and long-term borrowing in terms of loan term, interest rate, loan type, repayment method, etc.

1. Loan term for short-term and long-term borrowings.

1. The term of short-term borrowing.

Short-term borrowing refers to borrowing with a term of less than one year, generally in months, and the term can be 3 months, 6 months, 9 months, 12 months, etc., or shorter terms, such as 1 month, 2 months, etc.

2. The term of long-term borrowing.

Long-term borrowing refers to borrowing with a term of more than one year, generally measured in years, and the term can be 2 years, 3 years, 5 years, 10 years, etc., or a longer term, such as 20 years, 30 years, etc.

2. Interest rates on short-term and long-term borrowings.

1. Interest rates on short-term borrowings.

The interest rate on short-term borrowing is generally lower than that on long-term borrowing because short-term borrowing has a short term and lenders can borrow faster, so banks don't charge too high interest rates.

2. The interest rate of long-term borrowing.

The interest rate on long-term borrowings is generally higher than the interest rate on short-term borrowings, because long-term borrowings have a longer term and it may take longer for lenders to take out loans, so banks charge higher interest rates.

3. Types of loans for short-term and long-term borrowings.

1. The type of loan for short-term borrowing.

The types of loans for short-term loans generally include credit loans, secured loans, bill loans, short-term loans, etc.

2. The type of loan for long-term borrowing.

The types of loans for long-term loans generally include mortgage loans, credit loans, secured loans, bill loans, etc.

4. Repayment methods for short-term loans and long-term loans.

1. Repayment method of short-term loans.

The repayment methods of short-term loans generally include equal principal and interest repayment method, equal principal repayment method, interest first repayment method and principal repayment method at maturity, etc.

2. Repayment method of long-term loans.

The repayment methods of long-term loans generally include equal principal and interest repayment method, equal principal repayment method, installment interest repayment method, and maturity principal repayment method.

It can be seen from the loan term, interest rate, loan type, repayment method and other aspects of short-term loan and long-term loan introduced in this article that there are obvious differences between short-term loan and long-term loan in these aspects, therefore, when applying for a loan, the borrower should choose the appropriate form of loan according to his actual situation to obtain better borrowing effect.

Legal Analysis: The Difference Between Short-Term Borrowing and Long-Term Borrowing: First, the biggest difference is the term.

The long-term loan term of the travel state is long, and the short-term loan term is short; Second, the risk-taking is different. The risk of short-term borrowing is relatively low; Third, the biggest advantage of short-term borrowing is low interest rates. Fourth, short-term borrowings only account for the principal, while long-term borrowings account for both the principal of the borrowings and the adjustment of interest expenses.

Long-term borrowings are the main funds in the project investment**.

Legal basis: Article 35 of the Commercial Bank Law of the People's Republic of China A commercial bank loan shall strictly examine the borrower's purpose of borrowing, ability to repay, and method of repayment. Commercial banks shall implement a system of separating examination and lending from examination and approval and grading of loans.

Article 36 The borrower shall provide a guarantee for a commercial bank loan. Commercial banks shall conduct a strict examination of the guarantor's ability to repay, the ownership and value of the collateral and pledge, and the feasibility of realizing the mortgage or pledge.