business loan bajaj

Quick apply

Just 60 seconds to apply

please enter your full name
Enter 10-digit mobile number
Please enter your Birth date
Please enter valid PAN card number
Please enter your pin code
Enter personal email address

I consent to the T&C and authorize Bajaj Finance Limited, its representatives/business partners/affiliates to use my details for promotional communication/fulfilment of services availed.

Thank you

Successful businesses keep a close eye on the working capital and use it as a parameter to judge the business performance. It is calculated as the difference between current assets and liabilities. Working capital reflects the funds used in day-to-day trading operations. In case of a liquidity crunch, small businesses can opt for a quick loan facility like cash credit to enhance the working capital and fulfil urgent expenses.

What is Cash Credit?

Cash credit is a type of short-term working capital loan extended by financial institutions, which allows the borrowers to utilise money without holding a credit balance in an account.

Here, a borrower can withdraw funds up to a limit predetermined by the financial institution as per prior agreements. Interests will be charged only on the withdrawn sum and not on the total loan principal sanctioned.

A cash credit loan can be used to meet the working capital gap in situations such as the following:

  • Purchasing raw materials.
  • Maintaining inventory.
  • Paying salaries and rent.
  • Storage and warehousing.
  • Financing sales, etc.

Advantages of Cash Credit

Cash credit loans are crucial for companies in a financial crunch that want to meet the working capital gap. Financial institutions like Bajaj Finserv can offer up to Rs. 45 lakh as corpus amount, which can be used to meet the day-to-day requirements and expand operations and invest in new machinery.

The revolving credit feature is one of the most significant cash credit benefits. A financial institution charges interest only on the borrowed sum, and the company can repay the accrued interest as EMIs. Meanwhile, the principal sum can be repaid at the end of the loan tenor.

 

 

Cash Credit vs Overdraft

Usually, cash credit and overdraft are considered similar financial products as most of their features overlap. However, there are some points on which these products can be differentiated, as discussed below -

Factors Cash credit Overdraft
Tenor Short term commitment Long-term commitment
End-use It can be used to meet the working capital requirements. It can be used for business and non-business purposes.
Principal borrowing limit The loan amount is based on inventory and stock volume. The loan amount is based on security deposits and financial statements.
Interest rate on running balance Lower than overdraft loans; only charged on the withdrawn sum. The interest rate is comparatively higher than cash credit.
5 Tips To Manage Working Capital image

5 Tips To Manage Working Capital for Your Manufacturing Business

How To Cut Costs Without Affecting Your Business' Growth

People Also Considered

Flexi Business Loan

Flexi Loan Conversion

Convert your existing loan | Pay lower EMIs by up to 56%

KNOW MORE
Machinery Loan

Machinery Loan

Funds to upgrade machinery
Up to Rs. 20 lakh | Pay only interest as EMI

KNOW MORE
Working Capital Loan People Considered Image

Working Capital

Manage operational expenses
Up to Rs. 20 lakh | Flexible tenor options

KNOW MORE
Business Loan for Women People Considered Image

Business Loan for Women

Avail customized loans
Up to Rs. 20 lakh | Minimal documentation

KNOW MORE