Cash Credit (CC): Definition, Meaning & Guide for Indian Businesses

Cash Credit is a working capital loan secured against inventory and receivables. Limit is 20-25% of turnover. Interest charged only on the amount drawn, not the entire limit.

What is Cash Credit (CC)?

Cash Credit (CC) is the dominant short-term working capital facility for Indian businesses. Lender (bank or NBFC) sanctions a limit (typically 20-25% of last year's turnover), secured against inventory and receivables under a charge. You can draw up to the limit, repay anytime, redraw — like a credit card. Interest typically 9-13% per annum on the drawn amount (not on the unused limit). Annual renewal needed. Documents: audited financials, stock statements, debtor age list. SMBs use CC for buying inventory, paying advance to suppliers, bridging customer credit periods. Cheapest short-term capital available — fixed deposit returns are 6-7%, CC costs 9-13%, so don't carry surplus when you have CC outstanding.