What is a cash credit loan?

A cash credit loan is a short-term loan offered by banks to help businesses manage their daily working capital needs. With this facility, a business can withdraw money up to a pre-approved limit, even if the account has no balance. Interest is charged only on the amount used, not the full limit. This type of loan is commonly used for handling everyday expenses, buying inventory, or meeting urgent cash needs in business operations.

Features and benefits of a cash credit loan

  • Quick approval

    Quick approval

    Apply for a cash credit loan to get funds within 48 hours* of approval with simple eligibility and minimum documents required. Be sure to check your business loan eligibility early to streamline the approval process.

  • Online loan account management

    Online loan account management

    Track your loan and access all the other information through our dedicated customer portal – My Account.

  • High-value working capital

    High-value working capital

    Receive a high-value capital of up to Rs. 80 lakh after meeting the eligibility criteria without pledging any asset.

  • Flexi loan

    Flexi loan

    Withdraw as per your need from the approved limit and pay interest only on the funds withdrawn with the Flexi Loan facility.

Bajaj Finance provides cash credit loans with minimum documentation. However, you need to produce certain documents like address proof, identity proof, business ownership, and financial documents. Make sure to know all about the required documents and keep them handy while applying for a loan. Additionally, we provide 100% transparent terms and conditions to avoid having to worry about any hidden charges.

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Eligibility criteria required for a cash credit loan

Business owners can meet these simple eligibility criteria to avail of a working capital loan from Bajaj Finance:

  • Citizenship

    Citizenship

    Indian resident

  • Business vintage

    Business vintage

    At least 3 years

  • CIBIL Score

    CIBIL Score

    Check your CIBIL Score for FREE

    685 or more

  • Age

    Age

    24 to 80 years*
    (*age should be 80 years at loan maturity)
    Documents required for cash credit loan

Documents required:

  • KYC documents - Aadhaar/ passport/ voter’s ID
  • PAN card
  • Proof of business ownership
  • Other financial documents

Documents required for a cash credit loan

  • KYC Documents: Mandatory PAN card, along with Aadhaar card, Passport, or Voter ID
  • Proof of Address: Passport, utility bills (electricity, gas, water), rent agreement, or property ownership proof
  • Business Address Proof: Business incorporation certificate, registration certificate, GST registration, Shop Act License, or Partnership Deed
  • Financial Documents: Income Tax Returns for the past 2-3 years, bank statements for the last 6 months, balance sheets and profit & loss statements for the past 2-3 years, and any other documents as requested

Advantages of a Cash Credit loan

Here are some key advantages of cash credit loans:

  • Working capital needs are easily addressed
  • As a secured loan, it offers quick and straightforward processing and approval
  • Cash credit loans can be availed either as an overdraft facility or a term loan
  • Terms and conditions are mutually agreed upon by the lender and borrower
  • Bank guarantees are offered to fulfil performance and financial commitments
  • Interest is charged only on the amount withdrawn and for the duration used
  • Applicants with strong credit history can negotiate favourable interest rates
  • Repayment schedules are flexible, with options for monthly or quarterly payments

How does a cash credit loan work?

A cash credit loan provides businesses with access to short-term funds up to a sanctioned limit, helping them manage working capital needs. Here's how it works:

  • Sanction of credit limit: The bank or lender evaluates the business’s financial position and approves a borrowing limit based on current assets and liabilities.
  • Withdrawal flexibility: Once approved, the business can withdraw funds from this limit as and when needed, rather than taking the entire amount at once.
  • Limit based on financial health: Stronger businesses with solid finances and a good credit score are likely to receive a higher sanctioned limit compared to those with weaker financials.
  • Interest on utilised amount: Interest is charged only on the amount withdrawn, not on the entire limit. The rate of interest depends on the business’s credit profile and any collateral offered.

Before you apply, you can also check your pre-approved business loan offer to find out if you qualify for instant loan options tailored to your profile.

Things to consider while applying for cash credit loans

  • Before applying for a cash credit loan, the borrower should keep the following points in mind:
  • Interest rates depend on the value of the collateral. If the collateral has high value, the borrower may be able to get a lower interest rate on the working capital loan.
  • Lenders may have rules about the type of collateral they accept. For example, some may not accept stock or raw materials. It's best to check with your lender about what is allowed.
  • Most lenders offer a running credit facility, which means businesses can withdraw money as and when needed for working capital.
  • Since it’s a running account, having a good repayment history is important. Lenders review the account every year and may change the loan terms based on your repayment record.
  • There may be restrictions on how the loan amount is used. The funds should be used only for working capital needs—not for long-term investments or personal expenses.
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Things to consider while applying for cash credit loans

Key points to keep in mind when applying for a cash credit loan:

  • Interest rates depend on collateral: The loan's interest rate is influenced by the value of the collateral. Higher-value collateral can help secure a lower rate.
  • Collateral limitations: Not all assets are accepted as collateral. Some lenders may reject inventory or raw materials. Always confirm what's acceptable with your lender.
  • Running credit facility: Most lenders provide ongoing credit access, allowing businesses to withdraw funds as needed to meet working capital demands.
  • Repayment history matters: Since cash credit works on a revolving basis, maintaining a strong repayment record is critical. Lenders review accounts annually and may revise terms based on repayment behaviour.
  • Restricted usage: Funds must be used strictly for working capital purposes. Using them for long-term investments or personal expenses is not allowed.

How to apply for cash credit loan

  • Research loan options: Compare cash credit loan offers from different finance companies, looking at interest rates, collateral requirements, repayment terms, and other factors to select the most suitable loan scheme for your needs.
  • Gather required documents: Review the documentation requirements of the chosen lender and collect all the necessary records, such as identification, income proof, and property documents, before applying.
  • Contact the lender: Visit the lender’s website and start the application process by filling out the online form with your details.
  • Submit your application: Submit your completed application along with the required documents and wait for the lender’s verification process.
  • Accept and use the loan: After verification, the lender will approve your cash credit loan, specifying the approved amount, interest rate, and repayment terms.

Frequently asked questions

What is a cash credit (CC) loan?

A cash credit loan is a type of short-term working capital loan that allows you to withdraw funds from a pre-approved limit as per your business needs.

What is an example of CC loan?

An example of a cc loan is a Flexi Term Loan from Bajaj Finance, which lets you pay interest only on the amount withdrawn and part-prepay at no extra cost.

What is CC loan limit?

The CC loan limit depends on your eligibility and creditworthiness. Bajaj Finance offers CC loans of up to Rs. 80 lakh.

What is CC loan interest rate?

The CC loan interest rate varies depending on various factors such as your credit score, business vintage, income, etc. Bajaj Finance provides competitive interest rates and no hidden charges on CC loans.

Who is eligible for CC limit?

To be eligible for a CC limit from Bajaj Finance, you need to follow the below given criteria:

  • Indian citizen.
  • Aged between 24 to 80 years.
  • Business vintage of at least 3 years.
  • CIBIL Score of 685 or more.

Is a cash credit (CC) loan good or bad?

A cash credit (CC) loan can be beneficial for short-term financing needs, offering flexible repayment terms. However, if mismanaged, it can lead to high interest costs and financial strain.

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