What is cash credit loan?
A cash credit loan is a type of short-term financing that allows businesses to withdraw funds from their bank account even if the balance is zero. The bank sets a credit limit based on the borrower’s financial health and creditworthiness. Businesses can utilise the loan for working capital needs like inventory purchase or day-to-day operations. Interest is charged only on the amount utilised, and the facility typically has a one-year tenure, which can be renewed.
Features and benefits of cash credit loan
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Quick approval
Apply for a cash credit loan to get funds within 48 hours* of approval with simple eligibility and minimum documents required.
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Online loan account management
Track your loan and access all the other information through our dedicated customer portal – My Account.
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High-value working capital
Receive a high-value capital of up to Rs. 80 lakh after meeting the eligibility criteria without pledging any asset.
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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Withdraw as per your need from the approved limit and pay interest only on the funds withdrawn with the Flexi Loan facility.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.
Eligibility criteria and documents required for cash credit loan
Business owners can meet these simple eligibility criteria to avail of a working capital loan from Bajaj Finance:
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Citizenship
Indian resident
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Business vintage
At least 3 years
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CIBIL Score
Check your CIBIL Score for FREE685 or more
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Age
24 years to 80 years*
(*age should be 80 years at loan maturity)
Documents required:
- KYC documents - Aadhaar/ passport/ voter’s ID
- PAN card
- Proof of business ownership
- Other financial documents
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.
Interest rate and charges on cash credit loan
The interest rate on cash credit loans, also known as working capital loans, varies across financial institutions and is subject to periodic revisions. Lenders determine the applicable business loan interest rate based on the borrower's creditworthiness, financial health, and repayment history.
Below is an overview of typical loan terms offered:
Loan amount |
Starting from Rs. 50,000 |
Loan tenure |
Up to 12 months (extendable based on business needs) |
Interest rate |
Starting from 11.99%* per annum |
The actual loan amount and interest rate may differ across lenders and are influenced by the applicant’s credit profile.
Interest rate and charges on cash credit loan
The interest rate on cash credit or working capital loans varies between banks and can change periodically. The rate is decided based on the borrower’s credit profile and financial history.
Loan Amount: Starting from Rs.50,000
Loan Tenure: Up to 12 months, but can be extended based on business needs
Interest Rate: Starting from 11.99%* per annum
Note: The interest rate and loan amount may vary depending on the lender and are based on the applicant's creditworthiness.
To view the list of the fees applicable on this loan, check out our business loan interest rate page.
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
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.
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.
The CC loan limit depends on your eligibility and creditworthiness. Bajaj Finance offers CC loans of up to Rs. 80 lakh.
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.
To be eligible for a CC limit from Bajaj Finance, you need to follow the below given criteria:
- Indian citizen.
- Aged between 24 years to 80 years.
- Business vintage of at least 3 years.
- CIBIL Score of 685 or more.
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.
