Cash Credit and Overdraft facilities provide flexible working capital support for eligible businesses managing day-to-day liquidity requirements.
Understanding Cash Credit & Overdraft Facilities
Cash Credit (CC) and Overdraft (OD) are commonly used working capital facilities that can provide eligible businesses with access to funds within approved limits, subject to the terms and conditions of the concerned financial institution.
These facilities can be useful for businesses that experience regular fluctuations between incoming receipts and day-to-day operating expenses.
What Is Cash Credit?
Cash Credit is generally structured as a working capital facility where eligible businesses can draw funds within an approved limit, subject to applicable terms and security requirements.
It is commonly considered by businesses that maintain regular inventory, receivables and operating cycles.
What Is an Overdraft?
An Overdraft facility allows eligible customers to withdraw funds beyond the available balance in an account up to an approved limit.
The facility can provide flexibility when businesses face temporary liquidity requirements, subject to lender approval and applicable conditions.
Potential Benefits
- Flexible support for short-term working capital requirements.
- Better management of temporary cash flow gaps.
- Support for routine operational expenses.
- Greater flexibility during fluctuating business cycles.
- Structured access to funds within an approved facility limit.
Who Can Consider CC & OD?
These facilities may be relevant for established businesses with identifiable working capital requirements and regular financial transactions.
Eligibility may depend on business vintage, turnover, banking history, financial statements, credit profile, security and the lender's internal assessment criteria.
Choose Based On Your Cash Flow Cycle
The right working capital facility depends on the nature of the business, frequency of cash flow fluctuations and overall funding requirement. Businesses should carefully review the sanctioned limit, applicable interest, charges, security requirements and repayment terms before proceeding.
Financial products, eligibility, pricing, documentation and approval are subject to the policies and assessment criteria of the respective financial institution.