Cash credit is a short-term revolving facility where a bank provides a credit limit against pledged current assets — inventory, raw materials, or receivables. The business draws funds as needed and pays interest only on the utilized amount.
CC limits are reviewed annually based on turnover, stock statements, and financial performance. Interest rates link to MCLR or EBLR plus a spread. It is one of the most common working capital facilities for manufacturing, trading, and distribution businesses in India.
Cash credit provides flexible working capital funding aligned with business cycles. Interest only on utilization makes it cost-effective for fluctuating requirements.
Nihal Fintech helps businesses set up cash credit facilities through banking partners, ensuring optimal credit limits aligned with business turnover.
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