Question

TRUE OR FALSE.

Long-term loans for working capital may be obtained from commercial banks.

Answer 1

This statement is false.

Explanation:

Working capital refers to short-term needs of a business (day-to-day operations like raw materials, wages, etc.), so short-term loans are generally used. Long-term loans are usually taken for fixed capital requirements (purchase of machinery, land, buildings, etc.). For working capital, businesses take short-term loans or overdrafts from commercial banks.