The full form of CC credit is Cash Credit.
Cash Credit (CC) is a type of short-term loan provided by banks to businesses that meet specific eligibility criteria. These loans are specifically designed to address the working capital needs of the business. A key feature of a CC account is that the business owner can withdraw funds up to the sanctioned borrowing limit without necessarily maintaining a credit balance.
In simple terms, Cash Credit is like a flexible line of credit for businesses.
Here's a breakdown of key aspects:
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Purpose: Primarily intended for meeting the day-to-day operational expenses of a business, covering costs like raw materials, salaries, and other immediate needs.
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Flexibility: Businesses can withdraw and repay funds as needed, up to the approved credit limit. Interest is typically charged only on the amount utilized.
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Collateral: Banks may require collateral or security, such as inventory, accounts receivable, or other assets, to secure the Cash Credit facility.
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Review and Renewal: CC limits are usually reviewed and renewed periodically (e.g., annually) based on the business's performance and financial health.
