Cash Credit or Working Capital :-

A Cash Credit or Working Capital loan is a type of financing that businesses utilise to support their day-to-day operations, such as purchasing raw materials, covering storage rent, handling repairs, paying salaries or wages, or overhauling machinery—activities that are essential for efficient supply chain and inventory management. These loans are generally used to manage working capital and are typically offered as an overdraft facility. The borrower can obtain this loan by providing adequate security, such as assets or stock, and may also use collateral like financial instruments or assets with a cash value exceeding the loan amount. Additionally, cash credit can be secured against fixed deposits.

In this arrangement, the bank creates a cash credit account for the borrower, which is used to withdraw funds as needed. Interest is charged only on the amount withdrawn and only for the period it is utilized, rather than on the entire loan amount approved by the lender

The key features of the cash credit or working capital loan are:

Overdraft Facility:
Cash Credit loans function as an overdraft, allowing businesses to withdraw funds as needed, up to a pre-approved limit. This provides flexibility to meet varying daily operational expenses without borrowing more than necessary.
Interest on Utilized Amount:
Interest is charged only on the actual amount withdrawn and only for the period it is used. This makes Cash Credit loans cost-effective, as businesses are not burdened with interest on the entire approved loan limit.
Secured Loan:
These loans are typically secured by collateral, such as assets, stock, or financial instruments like fixed deposits. The collateral provided often has a cash value higher than the loan amount, ensuring the lender's security.
Short-Term Financing:
Cash Credit loans are designed for short-term needs, typically to cover immediate working capital requirements like inventory purchases, payroll, or maintenance costs. They are generally renewable on an annual basis, subject to the lender's review of the business’s financial performance.

Flexible Fund Usage: The funds from a Cash Credit loan can be used for a wide range of business needs, including purchasing raw materials, paying rent, managing repairs, or any other day-to-day operational expenses critical to the business's functioning. This versatility makes it an essential tool for maintaining smooth operations.

Advantages of Getting Associated with Finnova Advisory for Working Capital

Expert Guidance and Tailored Solutions:
At Finnova Advisory, we provide expert guidance to help businesses secure the most suitable cash credit or working capital loan tailored to their specific needs. Our deep understanding of various industries and financial institutions ensures that you receive customized financial solutions that align with your business goals.
Wide Network of Lenders:
With our extensive network of Public Sector Banks, Private Banks, Cooperative Banks, and Non-Banking Financial Companies (NBFCs), we can connect you with the right lender offering the best terms. This wide array of options increases your chances of securing favourable rates and conditions, enhancing your business’s financial flexibility.
Efficient Application Process:
We streamline the entire application process, from initial consultation to documentation and submission, ensuring a hassle-free experience. Our team handles the complexities of the loan process, allowing you to focus on running your business while we take care of the details.
Maximized Funding Potential:
Finnova Advisory works diligently to secure the maximum possible funding for your working capital needs. We analyze your financial position and collateral options to present a strong case to lenders, helping you obtain the highest credit limit possible under the most favorable terms.
Ongoing Support and Relationship Management:
Our services don’t end once the loan is approved. We provide ongoing support to manage your relationship with the lender, assist with renewals, and offer advice on optimizing's your working capital management. This ensures that your business remains financially healthy and well-positioned for growth.