Trade credit - the most common form of short-term loans. Trade credit means a purchase on credit goods for resale or supplies for use in production. Trade credit is widely used in wholesale, retail and manufacturing. It is very convenient, especially for small firms. If the seller has ordered a credit check on the buyer, the loan is extended every time a customer makes a purchase. Even though sellers usually do not charge interest, but still credit can be costly to the buyer. The reason is that sellers often offer a discount for payment in a short time. Unsecured bank loan. Companies usually get unsecured loans from banks, which hold their accounts, put his daily earnings, etc. Bank, which is known creditworthiness of the company, do not require collateral for new loans. The interest rate set by the major banks for providing short-term loans, called the primary interest rate. Often, companies agree to provide short-term loan in advance. Terms of the loan agreement and revolving credit - they are two similar agreements. Short-term bank loans are often used by firms with seasonal working capital needs. Large firms with high creditworthiness can take not only short-term loans from banks, but also other non-financial firms, insurance companies and even individuals. In granting unsecured short-term loans they give a written promise to repay the loan. This document is called commercial paper. For agriculture, the role of loan sources is determined by the following factors. First, as in most other sectors of the economy, borrowed funds play an important role in retooling, upgrading of fixed assets that are often difficult to do at their own expense. Secondly, the borrowed funds play an important role for the formation of working capital.
One of the most important features of agricultural production is its seasonal nature.
This causes different from most industrial sectors procedure for working capital and reproduction. As the technological process of production and marketing of agricultural products took a few months, then ensure that the norm of working capital from their own sources is not only impossible but also not cost-effective - the excess of current assets, which is formed in the offseason, deadens the capital, and creates the preconditions for the inefficient use of temporarily idle funds . Therefore, agriculture plays a huge role to borrowing in periods of greatest production costs.
It should also be taken into account the role of small-scale production in agriculture. In our country, peasant (farmer) and household plots produced more than 50% of agricultural products. Changes in the structure of agricultural production in Russia, the desire for development of small and medium-sized businesses have led to significant differentiation of the industry by volume of agricultural production, and hence the scale used in the turnover of funds, which determines the need for some changes in the financial and credit support of the village.
Thus, agriculture is the sector, the normal functioning, much less development, which depends on the availability of credit and the established mechanism of crediting. However, it is the availability of credit is one of the main problems of farmers.
