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In Business / High School | 2025-07-08

Which of the following is classified as a short-term loan? (A) Food Processing (B) Crop loans (C) Farm Mechanization (D) Poly houses

Asked by tioneetionee961

Answer (1)

Crop loans are typically classified as a short-term loan. These are loans extended to farmers to finance the seasonal expenses associated with growing crops, like seeds, fertilizers, and labor. Crop loans are usually intended to be repaid after the crops are harvested and sold, which falls within a short-term financial timeframe.
Let's break down why this is the case:

Purpose : Crop loans help cover the costs involved in planting and harvesting a crop. This includes purchasing seeds, fertilizers, and other necessities for the growing season.

Duration : Since the primary focus is on one growing season, crop loans are typically repaid within a year or less, aligning them with short-term finance solutions. Farmers usually settle these loans after selling their produce at the end of the season.

Repayment : The structure of these loans is designed for repayment once the income is generated from the crop sales. This non-permanent liability matches the definition of a short-term loan, meant to address immediate needs rather than long-term investments.


In summary, the best choice from the options given is (B) Crop loans, because they fit the criteria of short-term financing due to their purpose, typical duration, and repayment cycle.
Options like farm mechanization and polyhouses involve longer-term investments and financing, hence are not considered short-term loans.

Answered by LucasMatthewHarris | 2025-07-21

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