Overview

When you need a working capital limit for your business, you have either two options to opt for overdraft facility or OD limit from bank or NBFC or CC limit from bank. Overdraft facility or OD limit can be provided by bank or NBFC but CC limit facility or cash credit limit provided by bank only. The primary security pledged by the bank or NBFC for the overdraft facility is the property of the borrower but the primary security in the CC limit is the stock and debtors of the company.

About the cash credit limit or CC limit

Cash Credit Limit or CC Limit is a kind of current account with check book facility. Cash Credit Limit or CC Limit by the Bank to the Small Medium Enterprises (SMEs) to meet their working capital requirements. CC limit holders provide stock and debtors as the primary security to the bank. A CC limit or cash credit limit allows you to withdraw money or issue checks up to the accepted CC limit, even if there is no balance in the account.It is typically a short-term credit facility for 12 months, which is renewable after every 12 months.

Cash Credit Limit Loan or CC limit in Delhi is the maximum amount you can withdraw from the bank. However the drawing limit is specified by the bank. The borrower will only have to pay interest on the utilized amount and not on the limit approval. Interest is calculated on a daily overrun balance and debited to a cash credit or CC account monthly.

You can withdraw any amount you pay in a cash credit or CC account until the limit is used. That's why the cash credit limit or CC limit facility is also called revolving credit facility.

Need for cash credit or CC limit

Working capital requirement of CC Limit Fulfills Business: Cash credit limit loan in Delhi satisfies the working capital requirement of the company. As a businessman you can buy goods on credit from the supplier and the supplier can offer a credit period for payment, but it is not always possible to sell all goods in a given time. There may be some untold stock and your money in stock.

Not only this, but you must sell your goods on credit to your buyer and expect timely payment from your debtors. But due to various reasons and circumstances you are not getting paid on time or maybe, due to all these you may have to face liquidity problem.

Due to the liquidity problem, you may not be able to pay regular and fixed, business expenses such as employee salaries, commissions, payments to your creditors, etc. The supplier may stop the goods and the employee may go on strike. This will not only affect your business but will also cause great harm to the company. This will also affect the company's goodwill and reputation.

To get out of this situation you can avail cash loan or CC limit from the bank, so that you do not face the problem of working capital. Timely payment of your creditors and other business expenses gives you mental satisfaction and helps you to run your business smoothly. This will also increase the company's goodwill and reputation.

CC Limit Used To Meet Unexpected Business Expenses: Business is full of uncertainty. As a businessman you have to make certain expenses for which you have not made any kind of provision. Expenses such as road accident, death of an employee, government policies, hike in rates, taxes and fees, strike etc. require a lot of money.

If you have a cash credit limit loan or bank to CC limit in Delhi, it will help you to meet all these unexpected business expenses on time and your business will run smoothly.

CC Limit A Great Tool For Seasonal Business: When a businessman manufacture or deals in a product which is seasonal like candle or light business, warm clothes business, etc. There is very less demand in off seasons. As there is no sale or very less sale, businessman may faces cash liquidity problem. Due to liquidity problem, you may be not able to pay your regular business expenses such as employee salary, payment to your suppliers etc. Supplier may stop supplying goods and worker may go on strike.

The Cash Credit Limit or CC Limit facility is a great tool to overcome this problem as the CC limit provides the bank with stock and debtors as the primary security.

Eligibility Criteria

Cash loan or CC limit is an agreement between the borrower and the lender that governs the duration of the cash loan or CC limit. All banks have their own credit eligibility criteria, but there are some common credit eligibility criteria that a borrower has to meet to obtain a cash loan or CC limit from the bank.

Following are some very important factors that will be examined by the bank to accept or reject the cash credit or CC limit application:

• Age: At the time of cash credit or CC limit application, applicant must be 21 years or above but not more than 65 years.
• Business Continuity: Bank checks business continuity of borrower who is applying for cash credit or CC limit. A borrower should be in the business for the last three years to avail cash credit or CC limit.
• Nature Of The Business: Cash credit or CC limit offered by bank to trader and manufacturer only. It is because primary security for cash credit or CC limit is unsold stock and book debts or debtors.
• Cibil Score: A cash credit or CC limit borrower, who is having good cibil score will get quick loan from the bank. Cibil score is a decisioning factor for sanctioning or rejecting cash credit or CC limit application.
• Valid, Clear And Marketable Title Deeds Of Property: Generally bank needs additional security from the borrower. So, cash credit or CC limit borrower must be having valid, clear and marketable title deeds of entire chain of the property along with approved sanction plan or map. The ownership and physical possession of the property lies with the borrower only.

Required Documents

Documents required for cash credit or CC limit depends upon the type of business of the borrower.
Documents required for different types of business are as follows:

Required Documents Lenders further divided self employed non-professional into three categories i.e. Proprietorship Firm, Partnership Firm, and Private Limited or Limited company. As per the types of company document required for cash credit or CC limit are as follows:

Cash Credit Or CC Limit Documents Required For Proprietorship Firm:

Documents List

• KYC Documents
• Income Documents
• Bank Statements
• Loan Documents
• Property Documents

Need Help?

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KYC Documents

• Pan Card
• Aadhar Card
• Voter ID Card
• Passport
• Latest Month Electricity Bill
• Copy of VAT/ Sales Tax, GST, Import-Export or any other registration Certificate
• Latest Office Address proof i.e. electrcity bill, rent agreemen etc.
• Company Profile on the Letterhead of the firm

Income Documents

• Latest 3 year ITR with computation of Income including P & L a/c, balancesheet with their schedule and annexures duly certified by CA
• Form No. 3 CA & 3 CD in case of audited balance sheet
• Latest 2 years VAT/ Sales Tax/ GST return
• Latest 2 year form 26AS if applicable

Bank Statements

• One year up to date all the saving and current account statement

Loan Documents

• Copy of Sanction Letter
• Up to date loan account statement
• Loan repayment schedule
• 12 Month upto date bank statement showing repayment of the loan
• Loan closure proof if loan is closed

Property Documents

• Copy of previous chain of property papers
• Copy of approved sanction plan or Map