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4 Options to Get A Cash Credit Loan in India

4 Options to Get A Cash Credit Loan in India

Businesses need access to cash inflows in order to commence their day-to-day operations. Be it the financial requirement to purchase machinery, pay labour wages, or manage the supply chain; companies are in persistent need of credit even when the returns are not consistent. 

According to a CRISIL analysis, the difference between current assets and liabilities of a huge proportion of MSMEs in India has constantly been widening since the financial year 2015. So, to bridge this working capital gap, enterprises often seek access to short-term financial aid from lending institutions in the form of a cash credit loan

Herein, borrowers can get access to a pre-approved loan limit based upon their creditworthiness. Moreover, cash credit loans are offered by various financial institutions across the country. So, if you are a business owner in need of working capital for your organization, here are 4 options to consider for a cash credit loan in India:

  1. Scheduled commercial banks
  2. NBFCs
  3. Fintech companies
  4. Private financers

However, before moving forward with the loan procedure, one should know all about what is cash credit loan and its salient features:

  • Purpose of the loan 

Since day-to-day operations are critical for the well-functioning of an organization, cash credit loans are available by companies to meet their working capital needs. The borrowed fund can be used to procure raw materials, purchase machinery, hire personnel, or pay wages to employees. 

  • No restriction on the number of withdrawals

Interestingly, any number of withdrawals is allowed against the account in the case of a cash credit loan. Working capital fund helps business stay agile by providing daily funding needed for smooth functioning. Options like Flexi loan provided by leading lenders lets the borrower withdraw money as per his/her needs. Hence, they may even choose to withdraw funds daily to cater to their working capital requirements.

  • Collateral

When you avail cash credit loan from leading commercial lenders, you will have to provide adequate security in the form of assets or stock. The loan amount is always lower than the cash value of the collateral. In the event of default, the security is sold at the prevalent market price, and the loan is closed. 

Alternatively, you can approach leading NBFCs like Bajaj Finserv and avail unsecured cash credit loan if you do not possess adequate security. Bajaj Finserv extends this facility to salaried self-employed individuals, professionals, and businesspersons. 

Furthermore, along with a hassle-free unsecured business loan, Bajaj Finserv also provides pre-approved offers to streamline the application process. These offers apply to various financing options, including a business loan and a personal loan. To check your pre-approved offer, you just have to provide your contact details and name. 

  • Flexi hybrid feature

While understanding what is cash credit what is cash credit, you must know that one of its types is the Flexi loan. In this arrangement, the lender sets a predefined credit limit, and the borrower can withdraw as and when required from the limit. Interest is charged only on the used funds and not on the whole corpus. 

Benefits of a cash credit loan

Business owners can hugely benefit from cash credit for working capital loans to strengthen their business. Here are the benefits that you, as a business owner, can avail from a cash credit loan:

  • It makes it convenient in meeting the working capital needs, and no need to worry about liquidity issues.
  • It can be easily arranged by lending institutions, provided that you meet the credit rating or pledge collateral security.
  • Withdrawals can be made many times up to the borrowing limit. Also, the deposit of excess cash into the account lowers the burden of interest.
  • Interest payments are tax deductible, which reduces the overall tax burden on a company.
  • Cash credit reduces the financing cost of the borrower as the interest is payable only on the utilized amount or minimum commitment charge.

For organisations, especially small businesses, choosing the best source of credit depends on the purpose for which one wants to avail the credit. Entrepreneurs looking to boost their working capital requirements can benefit hugely from a cash credit loan. Moreover, with the coming of certain NBFCs into the limelight, you can avail this financial aid without the hassles of cumbersome paperwork and help your business reach the apex of success. 

Moreover, cash credit finance also harbours several benefits like no restriction on withdrawal, an important source of working capital financing, lending institutions can easily arrange it, interest payments are tax deductibles, and the payable interest is only on the utilised amount.

Hence, entrepreneurs looking to strengthen their organisation can benefit from cash credit financing. Additionally, with the rise of NBFCs across the country, you can skip the lengthy procedure of acquiring cash credit and proceed with online business loan apply without the hassles of complicated paperwork. You can easily apply for a cash credit loan as per your requirements.

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