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A revolving limit against stock and receivables. Draw what you need, pay interest only on what you use.
A cash credit limit is the standard working capital facility for a trading or manufacturing business. The bank sanctions a limit against your stock and your receivables, and you operate it like a running account.
On a term loan you take the whole amount and pay interest on all of it from day one. On a CC limit you draw only what you need, only when you need it, and you pay interest only on the amount drawn, only for the days it is outstanding. For a business whose cash cycle swings through the year, this is dramatically cheaper.
Most banks use the drawing power method. They take the value of your stock plus your debtors under 90 days, subtract your creditors, and apply a margin of 25%. The result is your drawing power, and you can draw up to that or the sanctioned limit, whichever is lower.
A monthly stock and debtors statement to the bank. Annual renewal of the limit with fresh financials. Collateral, usually property, in addition to the charge on stock. Miss the monthly statement and the bank can freeze the drawing power.
We work out the limit your actual cycle needs, rather than the largest number a bank will offer. An oversized limit costs commitment charges and tempts misuse. An undersized one leaves you short in your busiest month.
Interest is charged daily on the drawn balance. Park surplus cash in the account and the interest cost falls immediately.
Draw, repay and draw again through the year without a fresh application, as long as you stay within the limit.
The drawing power moves with your stock and debtors, so the facility grows in your busy season and shrinks in the quiet one.
The limit is reviewed and reset every year against fresh financials, and a growing business can ask for an enhancement.
| Business vintage | At least 3 years, with audited financials |
|---|---|
| Primary security | Hypothecation of stock and book debts |
| Collateral | Usually property or fixed deposits, typically 25% to 100% of the limit |
| Margin | 25% on stock and on debtors under 90 days |
| Compliance | Monthly stock statements and annual renewal are mandatory |
These are typical criteria. Individual lenders vary, and we will tell you which ones are flexible on your particular case.
You do not need any of these to enquire. We only ask for documents once we know which lender we are approaching.
Pre-filled with this product's own rate band and limits.
Pre-filled with the indicative rate band for Cash Credit (CC) Limit. Move the sliders to match your own case.
Twenty crore four lakh
1 yr
Your monthly EMI
₹1,74,78,844
for 1 yr
These numbers are indicative. Your actual offer depends on the lender. Most loans in India are floating rate, so the EMI can change when the RBI moves rates.
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