What is Short-Term Debt?
Short-term debt comprises borrowings whose repayment is due within 12 months of the balance sheet date, including bank overdrafts, working capital lines of credit, trade financing facilities, and the current portion of long-term loans.
How It Works
- Original maturity ≤ 12 months or current portion of longer-term debt.
- Classified as current liabilities on the balance sheet.
- Typically priced at SAIBOR + margin in Saudi facilities.
- Frequently revolving and renewed annually.
Saudi Context
Saudi short-term debt is dominated by SAMA-regulated bank overdrafts, working capital revolving credit facilities (RCFs), letters of credit, and trade financing for import-export businesses. Tier-2 Kafalah-backed facilities support SME working capital needs at preferential rates, especially for Saudization-aligned businesses.
Example
A Saudi retailer holds a SAR 5,000,000 overdraft facility at SAIBOR + 2.5%, drawn at SAR 3,200,000 at year-end. Reported on the balance sheet as a current liability under short-term debt.