Short term finance is primarily used for what purpose?

Short-term finance is primarily used for immediate working capital needs of a business. This type of finance is typically required to cover day-to-day operational expenses, such as purchasing inventory, paying suppliers, and meeting other short-term obligations that arise in the regular course of business. It is crucial for maintaining smooth operations, especially during periods when cash flow may be tight or when revenue has not yet been generated from sales.

Immediate working capital ensures that a business can continue functioning without disruption while managing its short-term liabilities. Unlike longer-term financing, which is often associated with capital expenditures or significant investments in business growth, short-term finance is focused on addressing immediate financial requirements.