1. Easier to provide: Banks can provide short–term credit more easily within the minimum functionality than long-term credit.
2. Higher interest: Banks
may
impose the higher
interest rate due to small
amount of credit with the minimum or
security less financing.
3. Rapid turn-over
of capital: The capital investment is
turning over rapidly and it
make
chance to further
investment
4. Minimum
cost of capital: Whether, the short-term credit makes the rapid turn-
over
of capital investment, thus it may reduce the cost of
capital.
5. Minimum
risks: Due to minimum time frame, the repayment of
loan may
cover in earlier. Thus, the risk is lesser
than the long term
credit.
6. Easy control over
the
customers: Banks can overlook more easily to the short- term
borrowing customers than the long-term
borrower.
7. Flexibility to lend: It is more flexible in the sense that the banks lends as the borrowers are needed and repay then in due time.
8. Minimum
complexity: The maintenance and supports of
further
credit procedures
is simple than long-term
finance.
9. Fund availability: In many cases, commercial banks prefer
to
maximize the
fund availability particularly small enterprises.