Cash Credit Loan

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

  Indian resident

• Business vintage

  At least 3 years

• CIBIL Score

  Check your CIBIL Score for FREE

  650 or more

• Age

  21 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• Interest is charged only on the amount withdrawn and for the duration used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

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.

You should consider a business line of credit if you need flexible access to funds for recurring or short-term business expenses, while a business loan is generally more suitable for one-time investments such as expansion, equipment purchases or office renovation.

Choose the option that best matches your business's funding requirement, repayment capacity and cash flow pattern before applying.

A small business line of credit is one of the best financing options for businesses that need ongoing access to working capital rather than a one-time lump sum. Unlike a traditional term loan, you can draw funds as required up to your approved credit limit and pay interest only on the amount utilised, subject to the lender's terms.

For eligible businesses seeking a collateral-free funding solution, Bajaj Finance offers Business Loans of up to Rs. 80 lakh with repayment tenures of up to 96 months. Businesses requiring flexible access to funds may also consider Flexi loan variants, which allow multiple withdrawals from the sanctioned limit and part-prepayment without additional charges, subject to the applicable terms and conditions.