Loan means that the bank directly lends cash to the enterprise for daily capital turnover or project construction, and a letter of credit can be understood as a payment commitment letter issued by the bank for one or several transactions of the enterprise with guarantees and additional conditions.

Types of working capital loans:

1. Temporary loan:

Temporary loan refers to a working capital loan with a term of 3 months (including 3 months), which is mainly used for the temporary needs of enterprises to purchase goods at one time and to make up for other seasonal payment funds.

2. Short-term loans:

Short-term loans refer to working capital loans with a term of 3 months to 1 year (excluding 3 months, including 1 year), which are mainly used for the capital needs of normal production and operation of enterprises.

3. Medium-term loans:

Medium-term loans refer to working capital loans with a term of 1 to 3 years (excluding 1 year, including 3 years), which are mainly used for the regular turnover occupation in the normal production and operation of enterprises and to lay the foundation for working capital loans.