Trade Loan is a short term loan provided to businesses to finance the purchase or sale of goods in trade transactions.
How It Works:
- A business requires funds for a trade transaction.
- A lender provides a short term loan.
- Funds are used for procurement or shipment.
- The loan is repaid after completion of the transaction.
Benefits:
- Provides immediate access to funds for trade execution
- Supports working capital requirements for buying and selling goods
- Enables timely fulfillment of business orders
- Improves liquidity during high volume trading cycles
Example:
A trader takes a short term loan to purchase goods and repays it after selling them in the market.