When you need working capital limit for your business, you have two options either you can opt for overdraft limit or OD limit from bank or NBFC or CC limit from bank. Get a cash credit loan in Delhi at Lending Bulls.
A cash credit loan is a bank-approved short-term financing and usually has a tenure of up to one year. It is classified under working capital loan. Based on the credit history of the applicant, the bank sanctions the loan up to an agreed limit. It allows the applicant to withdraw money which is more than the balance available in their accounts. The sanctioned amount depends upon the requirement of funds, existing current assets and current liabilities of the business, creditworthiness, repayment capacity etc. Inside as far as possible, the business can pull out any sum according to its necessity. Under cash credit loan, the amount withdrawn is charged at the rate of interest which is again fixed on the basis of the offered collateral, creditworthiness etc. Cash credit minus stock and assets such as raw materials, finished goods, including stores and parts.
Cash Credit Limit or CC Limit is a kind of current account with check book facility. Bank sanctioned cash credit limit or CC limit to Small Medium Enterprises (SMEs) to meet their working capital requirements. CC limit holders provide stock and debtors as primary security to the bank. A CC limit or cash credit limit allows you to withdraw money or issue checks up to the accepted CC limit, even if there is no balance in the account. It is generally a short-term loan facility for 12 months, renewable after every 12 months.
Cash Credit Limit in Delhi Loan or CC limit is the maximum amount that you can withdraw from the bank. However, the withdrawal limit is specified by the bank. The borrower has to pay interest only on the amount utilized and not on the limit sanctioned. Interest is calculated on the daily overdue balance and is debited monthly to the cash credit or CC account.
Whatever amount you pay in cash credit or CC account, you can withdraw it again until the limit is used up. Hence Cash Credit Limit or CC Limit Facility is also called as Revolving Credit Facility.
CC Limit Meets Working Capital Requirement of Business: Cash Credit Limit Loan in Delhi meets the working capital requirement of the company. As a businessman you can buy goods on credit from supplier and supplier can offer credit period for payment but it is not always possible to sell all the goods in a given time. Some unsold stocks in the stock and your money may get blocked.
Not only that, you may have to sell your goods on credit to your buyer and expect your debtors to pay on time. But due to various reasons and circumstances, you may or may not get the payment on time, due to all this you may face the problem of cash.
Due to liquidity problem, you may not be able to pay regular and fixed, business expenses on time like employee salary, commission, payments to your creditors etc. The supplier may stop supplying the goods and the worker may go on strike. This will not only affect your business but will also cause a lot of loss to the company. This will also affect the reputation and reputation of the company.
You can avail cash credit or CC limit from the bank to get out of this situation, so that you do not face the problem of working capital. Timely payment of your creditors and other business expenses gives you a lot of mental satisfaction and helps you to run your business smoothly. This will increase the credibility and credibility of the company.
CC Limit Used to Meet Unexpected Business Expenses: Business is full of uncertainty. As a businessman you have to incur some expenses for which you have not made any provision. Expenses like road accident, death of an employee, government policies, hike in rates, taxes and fees, strike, etc. require a lot of money.
Assuming you have cash credit limit advance in Delhi or CC breaking point from bank, it will assist you with meeting every one of these unforeseen costs of doing business on schedule and your business chugs along as expected.
CC Limit is a great tool for seasonal business: when a businessman manufactures or deals in a product that is seasonal such as a candle or light business, a warm clothing business, etc. There is little demand in the off season. As there are no sales or there are very few sales, the businessman may face the problem of liquidity of cash. Due to liquidity problem, you may not be able to pay your regular business expenses like employee salary, payments to your suppliers etc. The supplier may stop supplying the goods and the worker may go on strike.
Cash credit limit or CC limit facility is a great tool to tackle this problem as the CC limit is provided by the bank taking stock and debtors as the primary security.
Cash credit or CC limit is an agreement between the borrower and the lender that governs the duration of the cash credit or CC limit. All the banks have their own loan eligibility criteria but there are some general loan eligibility criteria which the borrower has to fulfill in order to get the cash loan or CC limit from the bank.
Following are some of the major important factors to be checked by the bank for accepting or rejecting the cash credit or CC limit application:
Age: Cash Credit or CC Limit At the time of application, the applicant should be 21 years or more but not more than 65 years of age.
Business Continuity: The bank checks the business continuity of the borrower who is applying for cash loan or CC limit. To avail cash credit or CC limit, the borrower should be in business for the last three years.
Nature of business: Cash credit or CC limit is offered by the bank to the merchant and manufacturer only. This is because the primary security for cash credit or CC limit is unsold stock and book debt or debtor.
CIBIL Score: A cash credit or CC limit borrower, who has a good CIBIL score, will get a quick loan from the bank. The CIBIL score is the deciding factor in whether to approve or reject a cash credit or CC limit application.
Valid, clear and marketable title deed of property: Generally, the bank requires additional security from the borrower. Hence, the cash loan or CC limit borrower should have valid, clear and marketable title deeds of the entire range of the property along with an approved sanction plan or map. The ownership and physical possession of the property is with the borrower only.
