Managing cash flow is an important part of running a business. Payments to suppliers, inventory purchases, operating expenses, and customer payment cycles can create short-term funding requirements.
Eligible businesses may explore working capital facilities such as Cash Credit and Overdraft, depending on their needs and lender eligibility.
Naitri Associates LLP helps business owners understand these financing categories and the general application process.
Get an instant quote from 50+ banking partners.
Cash Credit is a working capital facility generally designed to help eligible businesses finance certain operating requirements.
The sanctioned limit, permitted use, security, interest calculation, drawing power, and renewal conditions depend on the lender's agreement and applicable requirements.
An Overdraft facility allows an eligible customer to draw funds up to an approved limit under the terms agreed with the lender.
Interest and other charges depend on the facility structure and actual utilisation, as specified in the agreement.
A Dropline Overdraft is a facility in which the available limit reduces according to a predetermined schedule or the agreed facility structure.
The precise limit reduction, repayment expectations, interest terms, and applicable conditions must be confirmed with the lender.
May be relevant to eligible businesses that need a working capital facility for permitted operating requirements.
May be relevant when an eligible borrower needs access to an approved credit limit under agreed conditions.
May be relevant where the borrower requires a facility with a structured reduction in the available limit.
The correct option depends on the business's cash flow, operating cycle, financial profile, and lender terms.
Lenders may consider:
Estimate your monthly repayment obligations and plan your business cash flow requirements.
Discuss your business requirements and understand which facility may be relevant.
Enquire About Working Capital Finance