A Cash Credit (CC) is a short-term source of financing for a company. A cash credit is a short-term loan drawn-out to a company by a bank. It permits a company to withdraw money from a bank account without keeping a credit balance.
The account is limited to only borrowing up to the borrowing limit. Also, interest is charged on the amount borrowed and not the borrowing limit.
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What are the documents required for cash credit or cc limit?
Documents required for cash credit or CC limit depends upon the type of business of the borrower.
Documents required for different types of business are as follows:
- Pan Card
- Aadhar Card
- Voter ID Card
- Passport
- Latest Month Electricity Bill
- Copy of VAT/ Sales Tax, GST, Import-Export or any other registration Certificate
- Latest Office Address proof i.e., electricity bill, rent agreement etc.
- Company Profile on the Letterhead of the firm
- Latest 3 year ITR with computation of Income including P & L a/c, balance sheet with their schedule and annexures duly certified by CA
- Form No. 3 CA & 3 CD in case of audited balance sheet
- Latest 2 years VAT/ Sales Tax/ GST return
- Latest 2 year form 26AS if applicable
- One year up to date all the saving and current account statement
- Copy of Sanction Letter
- Up to date loan account statement
- Loan repayment schedule
- 12 Month up to date bank statement showing repayment of the loan
- Loan closure proof if loan is closed
- Copy of previous chain of property papers
- Copy of approved sanction plan or Map
- Pan Card
- Aadhar Card
- Voter ID Card
- Passport
- Latest Month Electricity Bill
- Copy of Rent Agreement/ Registered Lease Deed
- Latest 3 year ITR with computation of Income
- Latest 2 year form-16 with 26AS if applicable
- One year up to date salary account statement
- Copy of Sanction Letter
- Up to date loan account statement
- Loan repayment schedule
- 12 Month up to date bank statement showing repayment of the loan
- Loan closure proof if loan is closed
- Copy of previous chain of property papers
- Copy of approved sanction plan or Map.
- Pan Card
- Copy of VAT/ Sales Tax, GST, Import-Export Certificate or any other registration certificate
- Copy of Partnership Deed
- Latest office address proof i.e., electricity bill, rent agreement etc.
- Company Profile on the Letterhead of the Company
- Latest 3 year ITR with computation of Income including P & L a/c, balance sheet with their schedule and annexures duly certified by CA
- Form No. 3 CA & 3 CD in case of audited balance sheet
- Latest 2 years VAT/ Sales Tax/ GST return
- Latest 2 year form 26AS if applicable
- One year up to date all the current account statement
- Copy of Sanction Letter
- Up to date loan account statement
- Loan repayment schedule
- 12 Month up to date bank statement showing repayment of the loan
- Loan closure proof if loan is closed
- Pan Card
- Aadhar Card
- Voter ID Card
- Passport
- Latest Month Electricity Bill
- Copy of Rent Agreement/ Registered Lease Deed
- Latest 3 year ITR with computation of Income
- Latest 2 year form-16 with 26AS if applicable
- One year up to date all the saving account statements
- Copy of Sanction Letter
- Up to date loan account statement
- Loan repayment schedule
- 12 Month up to date bank statement showing repayment of the loan
- Loan closure proof if loan is closed
- Copy of previous chain of property papers
- Copy of approved sanction plan or Map.
- Pan Card
- MOA & AOA
- Copy of VAT/ Sales Tax, GST, Import-Export Certificate or any other registration certificate
- Latest office address proof i.e., electricity bill, rent agreement etc.
- Company Profile on the Letterhead of the Company
- List of director & shareholder with their shareholding pattern duly certified by CA.
- Latest form-32
- Latest 3 year ITR with computation of Income including P & L a/c, balance sheet with their schedule and annexures duly certified by CA
- Form No. 3 CA & 3 CD in case of audited balance sheet
- Latest 2 years VAT/ Sales Tax/ GST return
- Latest 2 year form 26AS if applicable
- One year up to date all the current account statement
- Copy of Sanction Letter
- Up to date loan account statement
- Loan repayment schedule
- 12 Month up to date bank statement showing repayment of the loan
- Loan closure proof if loan is closed
What are the other key factors to be considered before choosing best cash credit limit or CC limit?
Check your cash credit limit or CC limit eligibility, that how much CC limit loan you can borrow from bank. Normally CC limit amount is calculated by the bank as a percentage of sale and stock along with financial statements. For example, a bank allowed cash credit limit up to 80% of stock plus 20% of sales or turnover of the business. CC limit eligibility of a borrower also depends upon so many other factors like age, income, cibil score, work profile, financial stability, market value of the property, loan to value (LTV) ratio etc.
Drawing power is a limit up to which a company can withdraw from the working capital limit sanctioned. Drawing power is calculated after deducting margin from “Stock less creditors plus debtors”. Borrower has to submit monthly or quarterly stock and debtors’ statement to the bank and based upon that bank calculates drawing power of the company.
Before taking cash credit limit or CC limit, check rate of interest offered by different bank or financial institutions. If rate of interest is high then interest is also high, so choose the bank which provides lower rate of interest so that CC limit interest will not put extra loads on your business.
Bank charges processing fees to process your cash credit limit or CC limit application. There are two types of charges one of them is loan processing fees and the other is cash credit account administration charges.
Processing fee charged by the bank to process your CC limit loan application, valuation of the property and stock, legal verification of the property, residence verification, office verification, due-diligence of income documents and bank statement etc. It could be a fixed percentage of your loan amount or a fixed amount.
Cash credit account administrations charges are taken by bank to maintain your CC account after disbursement. Some bank took upfront fees however some of them charged after sanction of the cash credit limit. So, check CC limit processing charges of bank deeply before applying for the loan.
When borrower decided to close his cash credit limit or CC limit before the completion of loan tenure or period. Bank may levy 1% to 5% foreclosure charges on cash credit limit.
If you apply through EASY LOAN MONEY, our professional consultant will assist you in negotiating with the banks and may get ZERO foreclosure charges for you.
Bank laid down several conditions related to balance transfer of cash credit limit or CC limit to another lender, cheque bouncing charges, late payment charges, interest on late payment etc. It is advisable to read all the terms and conditions before choosing the best bank.
As there is no EMI so there is no repayment, if limit is used within the specified limit. But cash credit limit or CC limit is repayable on demand by the bank at any time.
As there is not any fixed EMI, so there is no minimum monthly payment required for CC limit subject to limit utilized within the specified limit. But if CC limit account goes into excess, you have to repay excess amount immediately. If the excess amount is not repaid immediately, bank may put debit freeze in the CC account and you have to pay full outstanding amount in a specified time. If bank recalls your cash credit limit or CC limit then it may affect your credit rating or cibil score adversely.
When cash credit limit over utilized by the borrower and bank approves the overdrawn limit, then the interest charged on the excess amount is higher than the agreed CC limit rate of interest. This higher rate of interest is called penalty interest rate or charges.