A secured working capital loan, given on the basis of turnover and debtors and creditors and stock in hand, security of property required.
Brief introduction about cash credit limit :
- The best features interest is charged for actual usage period, flexibility if business increases the limit can be enhanced, interest savings as all the dealings being done thru bank and get credit benefits.
- No fixed repayment arrangement giving you flexibility and greater control over your day-to-day finances.
- Interest is only charged on the amount of credit used.
- You can apply for a temporary, permanent or seasonal limit depending on your needs.
- No minimum monthly repayments.
- A cost-effective option of avoiding fees associated with overdrawing accounts. Transactions will be honored up to your approved limit, across all banking channels.
Since it’s a line of credit, it is also ideal for those situations when you need extra money. When you’re short on cash, you can write yourself a loan by taking advances up to your pre-approved limit.
Eligibility Method (CC Limit)
Following are the few of the loan eligibility methods which most of the banks followed. The actual amount can vary from the bank to bank on the basis of their internal policies and decisions.
Income Basis : On the basis of Profit and Loss Account and Balance Sheet.
- Business Turnover Method: Through this method bankers calculate the average profit of the business as per industry average or as per the normal circumstances and arrive at a percentage of net profit of their own.
Eligibility Criteria: Available only for businessman on the basis of sales turnovers, stock, debtors and creditors
Loan Details (CC Limit):
- Loan Amount – Minimum loan amount for Cash Credit Limit is Rs. 10 Lakhs
- Rate of Interest (ROI) – It varies from 13.50% – 14.50%. Higher the risk higher the rate of interest and vice-versa.
- Processing Fee – A processing fee of 0.05% to 3% of the loan amount is payable upfront. This fee will be deducted from the disbursal amount payable to you.
- Documentaion – Below Appended is the list of Documents Required for the Cash Credit Limit :
- 3 years Profit & Loss A/c, Balance Sheet, Audit report if any.
- All loans details taken in the name of business.
- Property details to be offered to pledge.
- Loan Process (CC Limit)
- A normal loan process hardly takes anytime. It is an instance process.
- Normally, it takes 0 to 3 days from application submission to disbursement.
- Loans get sanctioned between 0- 3 working days if all the documentation and other forms, submitted, are in order.
- Loan applicants are requested to furnish the complete information timely.
- Loan Fundas :
Below mentioned are some of the logics or fundas about loans which gives us a fair idea about loan eligibility or how it is calculated & increased
a. Loan Funda No 1
Loan On The Basis Of Itr/ Salary/ Form 16 Or 16a Or Annual Income.
One Can Expect A Loan Equal To Emi One Half Of Monthly Income.
Monthly Income (MI) For Businessman
MI= 1/12*(Net Profit As Per ITR + Interest To Partners/ Directors + Interest On Unsecured Loans + Depreciation)
Monthly Income For Salary 100% Of Fix Monthly Component + 50% Of Variable Components Such As Bonus, Commission Etc. Which Is Not Fixed By Its Nature
Applicable To Business Loan, Home/ House Loan, Personal Loan, Loan Against Property, Car Loan, All Emi Base Loans
b. Loan Funda No 2
Home Loan For Businessman Or Property Loan For Businessman On The Basis Of Running Emi’s, If Emi Paid Are >= 9 Or 50% Of The Total Tenure.
Any Businessman Can Take A Loan Equal To Total Of All Emi *1500, If Emi Paid Are >= 9 Or 50% Of The Total Tenure.
All Or Few Existing Running Loan May Be Asked To Close Or Bank Will Repay First Those Loan And Balance Will Be Given To The Borrower
c. Loan Funda No 3
In Case Of Property Loan Such As Home Loan Or Loan Against Property The Loan Eligibility Can Be Increased/ Enhanced By Clubbing Income Of Maximum Three Persons
Which Can Be Family Members In Tree/Chain Or
Co Partner In Business Or
Co Partner In Property.
d. Loan Funda No 4
Loan Under Liquid Income Proof (Lip) Programme
Liquid Income Proof Stands For Actual Activity Or Business Being Done By A Businessman. Wherein The Banker’s Official Assesser Evaluate The Repaying Capacity Of A Businessman By Visiting His Place Of Business, Shop, Office Or Godown Etc.
On The Basis Of The Report The Loan Is Granted.
Under Lip Programme No Itr (Income Tax Return) Is Required