Short-term notes are usually debts that a business must repay within a year. This financing option can be implemented when a business requests a period of fewer repayments because times may be tough or interest rates may be high. In this case, the business may be issued with a short-term note by the lender, allowing the business to add this to their balance sheet and present it as short-term liabilities.
For example…
Sophia has approached her bank to see if they can issue a short-term note on the business loan she needs to take out to expand her gymnastics business. The bank agrees to give her a short-term note in the ten thousand dollar business loan plus interest and it will be due in six months. Lisa is hoping that the upcoming summer holidays and the ensuing need to keep kids occupied will help boost her revenues as she puts on more classes.
