Cash Credit Limit for Your Business

Cash credit is a revolving working capital facility secured primarily against your current assets — inventory and book debts. The bank sanctions a ceiling, you draw against it as you buy stock or wait on payments, and you repay as customers settle. Interest runs only on the drawn balance.

The limit is reviewed and renewed annually. Within the year, how much you may withdraw at any moment is governed by drawing power, recalculated from the stock and debtor statements you submit. That is the single mechanic most CC borrowers underestimate.

Lenders take your declared stock and eligible book debts, subtract creditors, and apply a margin — the share you are expected to fund yourself. What remains is drawing power, and it is capped by the sanctioned limit. Margins, the age at which receivables stop being eligible, and inspection frequency all vary by lender.

The practical consequences are simple. Slow-moving or unsold inventory drags drawing power down. Overdue debtors stop counting. And a stock statement submitted late can leave you unable to withdraw against a limit you legitimately hold.

Traders, distributors, wholesalers and manufacturers — any business that ties money up in inventory and credit sales — are the natural users. If you carry no stock, an overdraft facility is usually the better fit, and many businesses run both alongside a term loan for one-time spending.

Registered MSMEs have additional routes: guarantee-backed limits let lenders fund without full collateral. See our guide to government MSME loan schemes for how those work.

Lenders look at business vintage, turnover consistency across GST returns and bank credits, the conduct of your current account, existing obligations and repayment record, the quality of the stock and debtors being offered, and clean title on any collateral.

Proprietorships, partnerships, LLPs and companies are all eligible. Thresholds differ widely between banks and NBFCs, which is why a single rejection is rarely the end of the matter. Our eligibility checker gives you an indicative position in a couple of minutes.

Indicative pricing on our panel runs 9.00% – 16.00% p.a. per annum, as of 10 July 2026. The final rate is the lender's call and moves with security, turnover, industry and limit size.

Expect a processing fee at sanction, an annual renewal fee, stock inspection and valuation charges, and penal interest where drawing power is exceeded or statements are not filed. Renewal is a real assessment, not a formality: a limit fully drawn all year with no repayment swings reads as stress and can be reduced. We prepare renewal papers in advance for clients so that does not happen by accident.

New to the product? Our plain-language cash credit explainer covers drawing power and stock statements, while the business funding guide sets cash credit against the other facilities. Chennai traders can start with cash credit limits in Chennai.

• KYC of the business and of the proprietor, partners or directors.
• GST certificate, Udyam registration, partnership deed or incorporation documents.
• Audited financials and income tax returns for the last two to three years.
• GST returns for the recent period.
• Twelve months of bank statements for all operating current accounts.
• Latest stock and debtor statements, plus creditor details.
• Existing sanction letters and repayment track record.
• Property title documents and tax receipts, where collateral is offered.

An existing limit is sized to the business you were when it was sanctioned; it does not grow on its own. The signals that you have outgrown it are familiar — the account is fully utilised most of the month, suppliers are being paid late, and orders are being declined for want of funds.

An enhancement raises the ceiling with your current lender; a takeover moves the facility to a lender offering a higher limit or better terms. Either route needs updated financials, GST returns, stock and debtor statements and clean conduct. We handle the review, the proposal and the placement.