Secured Cash Credit Loan
Cash credit loans are offered to companies against adequate security. These loans are extended to companies, they are used to fund working capital requirements. After acquisition of required security against the loan, the company’s bank account will be credited with funds. The company can withdraw money from the bank to the specified limit as indicated by the bank. The company typically uses this type of loan to run its day-to-day operations such as buying raw materials, paying salaries or wages, fixing repairs or overhaul of machinery etc. It can, however, be used for capital expenditure such as buying machinery, leasing of building etc. The cash credit account is like current account. The only difference is that current account allows overdraft facility occasionally, while cash credit allows overdrawing from the account on a continuous basis.