A cash credit is a short-term loan facility where a business can borrow money up to a sanctioned limit against the security of inventory or receivables, helping to manage working capital needs effectively.
| Purpose | Working capital requirements for businesses |
|---|---|
| Loan Amount | Up to the value of stock and receivables (sanctioned limit varies by lender) |
| Tenure | Short-term, typically up to 1 year (renewable) |
| Interest Rate | Charged only on the amount utilized, varies by profile and lender |
| Security | Secured against inventory, raw materials, finished goods, or receivables |
| Repayment | Interest paid on utilized amount; principal repayment as per agreement |
| Processing Time | Typically 3 to 7 working days |