Introduction
As a Mentor of Business Loan, one of the most common questions business owners ask is — “Cash Credit kya hota hai aur ye business ke liye kaise kaam karta hai?”
Cash Credit is one of the most powerful working capital finance tools for businesses that want flexibility, liquidity, and smooth day-to-day operations.
What is Cash Credit?
Cash Credit is a bank-approved working capital limit that allows businesses to withdraw funds as and when required, up to a sanctioned limit. Interest is charged only on the amount used, not on the full limit.
Why Cash Credit is Important for Businesses
From a mentor’s point of view, Cash Credit is essential because it helps businesses manage cash flow without financial pressure.
Key Benefits of Cash Credit
- Helps in managing daily operational expenses
- Ensures smooth cash flow cycle
- Interest charged only on utilized amount
- Flexible withdrawal and repayment
- Ideal for growing and seasonal businesses
Who Should Opt for Cash Credit?
Cash Credit is suitable for businesses that have regular operational expenses and need continuous liquidity.
Eligible Business Types
- Manufacturers
- Traders & Wholesalers
- Service Providers
- MSMEs & SMEs
- Growing enterprises