DECA Financial Consulting Complete Practice Exam

Utilizing short-term loans can be an effective strategy for a company to manage cash shortfalls. This approach allows businesses to access immediate funds to cover expenses or bridge gaps in their cash flow, without committing to the long-term obligations associated with traditional loans. Short-term loans are typically easier and faster to obtain, providing quick relief in tight financial situations. They can help a company to stabilize its operations in the short run while looking for more sustainable solutions or generating revenue.

In contrast, obtaining a long-term loan may involve a lengthy approval process and usually ties the company to a longer repayment schedule, which may not effectively address an immediate cash shortfall. Deferring payroll payments can create morale issues and may risk losing valuable talent, while reducing employee hours can negatively impact productivity and employee satisfaction. Each of these alternatives might have longer-term implications that could hinder a company's growth and reputation.