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It allows companies and enterprises to withdraw money from bank accounts, even if they have insufficient balance up to a predetermined borrowing limit set by the lender. Companies or enterprises with fluctuating cash flows mainly use Cash Credit to manage their business expenditure.
However, if you are looking for quick funds to meet your urgent working capital needs, you can simply check and compare from available business loans offered by banks/NBFCs on Paisabazaar at interest rates starting from 14.99% p.a.
What is Cash Credit?
Cash Credit (CC) is offered by banks/NBFCs to businesses or companies based on their credit history and financial capability. Cash credit is a type of working capital loan in which you will have to hypothecate your stocks and receivables in the form of collateral or security.
You can repay the loan amount within 12 months that can be renewed. The interest rates on cash credit is charged only on the utilized loan amount from the total sanctioned limit.
For Example: If you own a business with cash credit limit of Rs. 20 lakh, and you withdraw Rs. 5 lakh, then the interest shall be charged only on Rs. 5 lakh, not the total credit limit of Rs. 20 lakh.
Features of Cash Credit Loan
With a Cash Credit loan, your business gets access to funds to meet working capital needs. Find below the key features of Cash credit for more understanding:
Short-term Loan: To meet day-to-day business requirements like purchasing machinery/equipment, buying goods and raw materials, paying rent/salaries, etc.
Repayment: Cash Credit is a short-term finance with a repayment tenure of 12 months. It can be repaid on a monthly/quarterly/half-yearly basis, depending upon the issuing bank.
Interest Rate: Interest rate is charged only on the amount utilized, not the full sanctioned limit. Moreover, funds can be withdrawn multiple times from the sanctioned limit.
Collateral/Security Requirement: Typically secured by inventory, receivables, or other current assets. Individual borrowers can also avail cash credit against their fixed deposits.
Borrowing Limit: Higher limits can be availed by businesses with good credit scores and repayment history. Credit limit is sanctioned considering the company’s turnover and tenure, volume and creditworthiness.
Tax Benefit: Interest rate paid on cash credit is tax-deductible.
Cash Credit vs Term Loan vs Overdraft
Find below the comparison of Cash Credit vs Term Loan vs Overdraft for better understanding:
| Nature | Cash Credit (CC) | Overdraft (OD) | Term Loan (TL) |
| Purpose | To meet day-to-day business requirements | To meet short term cash requirements | For short to long-term investments |
| Interest Charged on | Utilized Amount | Utilized Amount | Fixed term loan amount |
| Tenure | Typically, 1 year and revolving | Usually 1 year or less | Fixed Term (1 year – 5 years) |
| Security | Current assets, like receivables | On Fixed Deposits or other assets | Nil for Unsecured Term Loan |
| Repayment | Flexible within sanctioned limit | Flexible within sanctioned limit | On Entire Loan Amount |
|
Account Type |
Cash Credit Account |
Linked to Savings/Current Account |
Separate Loan Account |
| Sustainability | Businesses with regular cash flow | Individuals requiring short-term funds | Individuals making purchases for business |
Who Can Apply for a Cash Credit Loan?
Cash Credit (CC) can be availed by the following business entities that include the following:
Business owners, self-employed professionals, traders, wholesalers, manufacturers, exporters, women entrepreneurs, Proprietorship Firms, Partnership Firms, Private Limited Companies, Public Limited Companies, Limited Liability Partnerships (LLPs) and various other business entities.
Cash Credit Interest Rates
Cash Credit interest rates can vary from lender to lender and shall change from time to time. The rates shall also depend on your profile, business type, creditworthiness and financial history.
Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs
| Bank/NBFCs | Interest Rate |
| Axis Bank | 10.75% p.a. onwards |
| Flexiloans | 1% per month onwards |
| HDB Financial Services Ltd. | 8% - 26% p.a. |
| HDFC Bank | 10.75% - 25% p.a. |
| IDFC First Bank | 10.50% p.a. onwards |
| Indifi | 1.50% per month onwards |
| Kotak Mahindra Bank | 16% - 26% p.a. |
| Lendingkart | 12% - 27% p.a. |
| Mcapital | 2% per month onwards |
| NeoGrowth Finance | 15% - 40% p.a. |
| Tata Capital | 12% p.a. onwards |
| UGRO Capital | 9% - 36% p.a. |
| Bajaj Finserv | 10% to 26% |
Also Check: Business Loan Interest Rates of all banks & NBFCs
Cash Credit Fees & Charges
The Cash Credit fees and charges levied by banks and NBFCs shall vary from one another. Find below the list of fees and charges applicable while availing cash credit from prospective lenders.
- Processing Fees
- Renewal Fees
- Penal Interest/Overdue Charges
- Documentation/Legal Charges
- Commitment Charges
- Inspection Charges
- Account Maintenance Charges
Eligibility Criteria for Cash Credit Facility
To qualify for a Cash Credit facility, a business or entity must meet certain criteria related to its legal status, financial strength, and operational history.
- Business Entity Type: Sole proprietorship, Partnership, Limited Liability Partnership (LLP), or Private and Public Limited Company and various other eligible business entities
- Citizenship: Indian
- Age: 18-80 years at time of loan maturity
- Business Tenure: Usually, 1-3 years
- CIBIL score: Minimum preferred 685 or more
- Collateral/Security: Current assets, Inventory, Equipment, or Real estate
Documents Required for Cash Credit Loan
- KYC documents: PAN card (Mandatory), Aadhaar card, Passport, Voters ID
- Address Proof: Passport, Utility bills (Gas, Water, and Electricity), rent agreement, proof of property ownership
- Business Address Proof: Certificate of business incorporation, registration certificate, GST certificate, Shop Act License, Partnership Deed.
- Financial Documents: Last 2-3 years’ ITR, Last 6 months’ bank statement, Last 2-3 years’ balance sheet, P&L statement, any other document required
How to Apply for a Cash Credit Loan Online?
Procedure to avail Cash Credit
The initial step is that a bank or lender sanctions a limit to a business or enterprise and from the assigned limit, businesses can withdraw money as per their requirements.
However, the limit sanctioned by the lender depends on the current assets and liabilities of the business. Strong and financially sound establishments are sanctioned with higher limits, as compared to businesses with lesser finance or lower credit score.
The interest rate charged by the bank or lender depends on the creditworthiness and submitted collateral by the company or business.
Benefits of Cash Credit for Business
Find below the key benefits of Cash Credit (CC) facility for businesses and companies:
- Revolving credit facility
- Interest only on utilized amount
- Supports working capital requirements
- Quick access to funds
- Improves cash flow management
- Helps in building business credit
- Tax-deductible interest
Banks Offering Cash Credit in India – 2026
There are several private and public sector banks offering Cash credit loans in India that include SBI, Axis Bank, Bank of Maharashtra, Federal Bank, Kotak Mahindra Bank, etc.
The interest rates, credit limit and processing fees charged shall depend on applicant’s profile, business type, nature of business, financial stability and relationship with the bank.
Cash Credit Repayment Tenure
Cash Credit has no fixed EMIs like term loans and it allows businesses to withdraw funds as per their requirements.
The repayment tenure of Cash Credit is usually of 12 months that can be renewed annually. The renewal is based on the bank’s criteria, timely interest payments, credit utilization, business performance, etc.
The interest is charged monthly and only on the utilized amount from the total sanctioned limit. Your repayment in the form of the amount deposited reduces the outstanding balance. Moreover, you can withdraw multiple times from the sanctioned limit.