Guidelines for Cash Credit
When you own a business, it's crucial to be proactive in managing your capital requirements. Capital is the lifeblood of any business, and without sufficient funds, growth can be stunted. To keep your operations running smoothly, external financial assistance often becomes necessary. One such popular form of financial aid is cash credit. In this article, we’ll explore the concept of cash credit and how it can benefit your business with the help of CredManager.
What is Cash Credit ?
Cash credit is a type of short-term financing that helps businesses meet their working capital needs. CredManager offers cash credit to businesses, providing a flexible loan that can be used for various operational purposes. The loan is typically extended based on the business’s credit history and financial health.
When you obtain funds through cash credit through CredManager, you can utilise them for multiple business-related activities, such as expanding operations, purchasing equipment or raw materials, hiring staff, consolidating debt, and more. This financial tool is designed to help you manage the day-to-day cash flow requirements of your business.
To avail of a working capital loan like cash credit through CredManager, your business needs to hypothecate its stocks and receivables. The loan usually comes with a tenure of up to 12 months, which can be renewed depending on your business's performance. The amount you can borrow is limited to the sanctioned credit limit, and you are required to provide collateral or security to secure the loan. Once approved, cash credit offers a quick solution to any cash flow issues your business may face.
Key Features of Cash Credit
Here are the notable features of cash credit
- Short-Term Financing: Cash credit is a short-term loan with a repayment period of up to 12 months, making it ideal for meeting immediate working capital needs.
- Interest on Withdrawn Amount: Interest is charged only on the amount you withdraw, not on the total sanctioned limit. This means you pay interest only on what you use.
- Flexible Withdrawals: You can withdraw money as many times as needed, within the limits of your sanctioned credit.
- Collateral Requirement: To avail of cash credit you need to provide collateral or security.
- Higher Limits for Strong Credit: If your business has a strong credit score and a solid repayment history, you may obtain a higher credit limit.
- Turnover-Based Limits: The credit limit is determined based on your business’s turnover and transaction volume.
- Flexible Repayment Options: You can repay the borrowed amount monthly, quarterly, or half-yearly, depending on what suits your cash flow.
- Cash Credit Against Fixed Deposits: If you are an individual borrower you can avail cash credit against your Fixed Deposit.
- Recall on Short Notice: The lender has the right to recall the sanctioned amount on short notice, providing flexibility to both parties.
- Tax Benefits: The interest paid on cash credit is tax-deductible, which can lead to significant savings.
