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Stay Ahead of Cash Flow Challenges – Get Flexible Overdraft Solutions Today!

Your backup plan for business expenses — get an overdraft limit and manage cash flow with ease.

Overview

Banks and other financial institutions offer short-term loans known as Cash Credit ( CC ) Facilities to companies in order to help them with their working capital requirements. A cash credit facility enables companies to take out money as needed, up to a certain limit, in contrast to a term loan, which disburses a set sum and is paid back over time. This facility manages short-term cash flow changes to assist firms in maintaining seamless operations.

Features

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Flexible Credit maximum:

Depending on their needs, businesses are able to take out up to the authorized maximum.

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Revolving Facility:

Within the limit, the money may be taken out, paid back, and taken out again.

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Interest Only Charged on Utilized Amount:

Interest is only assessed on the amount that is actually used, not the whole authorized maximum.

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Collateral Requirement:

Depending on the approved amount and business profile, collateral may or may not be needed.

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Disbursal:

Banks offer qualified firms quick approval and disbursement.

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Renewable Facility:

Subject to the company's financial stability and repayment history, this facility may be extended once a year.

Benefits

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Guarantees Continuous Business Operations:

Assists companies in handling cash flow problems and unforeseen costs.

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Promotes Business Growth:

Offers the funds required to take advantage of business prospects.

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Financial Flexibility:

Companies are free to pay back as their cash flow permits; there is no set repayment plan.

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Raises Business Credit Score:

Repayment on time raises the creditworthiness of the business.

Eligibility Criteria

To avail of a cash credit facility, businesses must meet the following conditions:

    • Type of Business:
    • Construction companies, manufacturers, traders, or service providers.
  • Must be a registered MSME that has been in business for at least one to two years; new companies may also qualify.
  • Must have a track record of successful business operations.
  • The lending bank requires that a business current account be kept up to date.
  • A minimum credit score of 730 is required.
  • Needs to fulfill the bank"s yearly turnover criteria.
  • Accurate financial records and GST compliance are essential.
  • The maximum loan amount is 25% of the yearly revenue.
  • Private limited companies, partnerships, and proprietorships are among the acceptable business forms.
    • Collateral:
    • Although unsecured loans could potentially be available, 100% collateral security is desired.
    • Stock:
    • there should be enough stock.

Documents Required

  • ID and Address Proof
  • PAN Card
  • Income Tax Return ( ITR ) and Financial Statements for the Last 3 Years
  • Current Bank Account Statements for the Last 12 Months of the Business
  • Residence and Business Address Proof
  • Sanction Letter and Repayment Schedule of Any Existing Loans
  • GST Registration Certificate and GST Returns for the Last 2 Years
  • Udhyam Registration Certificate
  • Rent Agreement Copy for Business and Residential Premises ( if rented )
  • Statement of Stocks and Debtors
  • Work Orders ( if applicable )
  • Project Report
  • Provisional Financial Statements ( if necessary )
  • Company PAN Card, Certificate of Incorporation, Memorandum of Association ( MOA ), Articles of Association ( AOA ), List of Directors, and Shareholding Pattern for Private Limited Companies
  • Partnership Deed, Company PAN Card for Partnership Firms, and Shareholding Pattern

Frequently Asked Questions

A Cash Credit ( CC ) is a short-term, flexible financing option for working capital needs, whereas a Term Loan is a fixed-term loan used for long-term investments.
  • Repayment & Interest: In a Term Loan, interest is charged on the entire loan amount, regardless of how much you use. In contrast, with CC, interest is charged only on the amount withdrawn and outstanding, not the full credit limit.
  • Purpose: CC is meant for day-to-day operational expenses, while Term Loans are used for long-term business investments.

  • A short-term loan known as Cash Credit is provided to financial institutions, corporations, and companies to meet their working capital needs. Conversely, an overdraft facility is a type of credit funding that banks provide to both individuals and businesses. Even if their account balance is insufficient, zero, or negative, it allows them to take money out of the banks where they have accounts.
  • There are several parallels between overdraft and cash credit. For example, the interest rate is applied on the amount of money used rather than the total amount authorized for both.

Yes, a Cash Credit ( CC ) limit can be increased, but it depends on the bank"s policies and your financial standing. To request a limit increase, you’ll typically need to submit a formal application along with supporting documentation, such as updated financial statements or business performance reports.

If your Cash Credit ( CC ) account becomes inactive, it may be classified as "dormant" or "inoperative", restricting your ability to make transactions, withdrawals, or transfers. Some banks may also charge inactivity or maintenance fees, which could reduce your available credit limit.

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