How is a long term loan typically defined in terms of repayment period?

A long-term loan is typically defined as a loan with a repayment period that extends beyond five years. These types of loans are generally used for significant investments, such as purchasing property, expanding a business, or investing in equipment. They are structured to be paid back over an extended period, which allows borrowers to manage larger sums of money without the burden of immediate, high repayments.

In contrast, loans with shorter repayment periods, such as those under one year or between one to five years, are considered short-term loans. These are generally associated with immediate financing needs or smaller projects that require quicker repayment. The option identifying twelve months only refers to a very specific timeframe that does not encompass the broader range required to qualify as a long-term loan, further reinforcing why the correct choice highlights a repayment period of more than five years.