Overdraft
A limit on your current account. You go below zero up to the limit, and interest accrues only on the negative balance, only for the days it is negative.
- Usually secured against property or deposits
- Suits irregular, unpredictable gaps
Loans · Working capital
Money that waits until you need it
Built for a business whose money comes in unevenly. You get a limit, you draw what you need, and you pay interest only on what is actually drawn.
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Interest on drawn amount only
Renewable annually
Two shapes
Overdraft and cash credit
Cash credit
A limit secured against stock and receivables, sized by a drawing power calculation the bank refreshes from your stock statements.
- Requires periodic stock and debtor statements
- Drawing power moves with your actual stock
- Suits a trading or manufacturing cycle
Why not a term loan
The difference that matters
A term loan gives you the whole amount and charges interest on all of it from day one. If you need ₹50 lakh for six weeks twice a year, you would pay a full year of interest on ₹50 lakh to cover twelve weeks of use.
A facility inverts that. The limit sits unused and costs you little or nothing; you pay for the weeks you actually draw. For a seasonal or receivables-driven business that difference is usually the whole argument.
FAQ
Questions people actually ask
What does it cost when I am not using it?
Usually a processing or renewal fee, and some lenders charge a small commitment fee on the undrawn portion. Considerably less than interest on a term loan you did not need.
Does it have to be renewed?
Yes, typically annually, with updated financials. Renewal is normally routine if the account has been conducted well — which is exactly what "conducted well" is measured on.
What is drawing power?
For cash credit, the limit is capped by a formula on your stock and receivables, less a margin. So the sanctioned limit is a ceiling; what you can actually draw this month depends on what you are holding.
Can a new business get one?
Harder without a banking history, and usually smaller. A term loan or a property-backed facility is often the more realistic starting point, and we will say so rather than putting in an application that will not clear.
Get the right facility, not the biggest one
Talk to us about a facility Call +91 88067 78771
Application forms are being finalised. Until they are live, call or email us and we will start your application directly.