Short-term financing refers to funds borrowed for a brief period, typically less than a year, to meet immediate financial needs. Businesses often use this type of financing to cover operational expenses, manage cash flow, or purchase inventory. Common sources include bank loans, lines of credit, and trade credit. This financing is crucial for maintaining liquidity and ensuring that a company can meet its short-term obligations. While it can provide quick access to cash, it usually comes with higher interest rates compared to long-term financing options. Proper management of short-term financing is essential for financial stability and growth.