Cash Credit
Cash Credit (CC) Loan:
- Definition: Cash Credit refers to a short-term loan extended by a financial institution to businesses, enabling them to withdraw funds up to a predetermined credit limit as necessary.
- Usage: Businesses typically utilize CC loans to address immediate working capital needs, including purchasing inventory, managing operational expenses, or bridging short-term cash flow gaps.
- Interest: Interest accrues solely on the amount withdrawn, rather than on the entire credit limit. The interest rate is often variable and typically tied to a benchmark rate in the market.
In essence, both CCÂ loans offer flexibility for businesses and individuals to navigate their finances, particularly when faced with fluctuating cash flow. CC loans are structured with a defined credit limit, whereas overdrafts offer a cushion beyond the available account balance. It’s essential to recognize that terms and conditions can differ among financial institutions, so it’s prudent to consult your bank for precise information.
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