Loan

CC/OD Limits / Term Loan

CC Limit Loan : Check your cash credit limit or CC limit eligibility, that how much CC limit loan you can borrow from bank. Generally CC limit amount is calculated by the bank as a percentage of sale and stock along with financial statements. For example a bank allowed cash credit limit up to 80% of stock plus 20% of sales or turnover of the business. CC limit eligibility of a borrower also depends upon so many other factors like age, income, cibil score, work profile, financial stability, market value of the property, loan to value (LTV) ratio et

 

OD Limit Loan : An overdraft limit is a loan amount sanctioned by the bank or NBFC to the borrower to meet his business requirements. OD limit is like a current account. An OD facility allows you to withdraw money or issue cheque up to the approved OD limit, even if there is no balance in the account. It is a short term credit facility generally for 12 month, which is renewable after every 12 months.

 

 

Documents required for CC limit and overdraft facility or OD limit depends upon the type of business of the borrower.


Documents required for different types of business are as follows:

KYC Documents

  • Pan Card
  • Aadhar Card
  • Voter ID Card
  • Passport
  • Copy of Rent Agreement/ Registered Lease Deed
  • Latest Month Electricity Bill
  • Copy of VAT/ Sales Tax, GST, Import-Export or any other registration Certificate
  • Latest Office Address proof i.e electrcity bill, rent agreement etc.
  • Company Profile on the Letterhead of the firm

Income Documents

  • Latest 3 year ITR with computation of Income including P & L a/c, balancesheet
    with their schedule and annexures duly certified by CA
  • Form No. 3 CA & 3 CD in case of audited balance sheet
  • Latest 1 years VAT/ Sales Tax/ GST return
  • Latest 2 years form 26AS if applicable

Bank Statements

  • One year up to date all the saving and current account statement

Loan Documents

  • Copy of Sanction Letter
  • Up to date loan account statement
  • Loan repayment schedule
  • 12 Months up to date bank statement showing repayment of the loan
  • Loan closure proof if loan is closed

Property Documents

  • Copy of previous chain of property papers
  • Copy of approved sanction plan or Map

 

 

What are the differences between cash credit limit and overdraft limit?

Cash Credit account and overdraft Limit or OD account both are like a current account with a pre approved limit from which the account holder can withdraw the amount he requires. Borrower generally considered both are same but there are some difference in both the account which are as follows:

Cash Credit Account

Overdraft Account

CC limit given by banks taking stock and debtors as primary securtiy. Bank may ask fixed assets of the borrower or company as additional security.

OD limit given by bank taking fixed assets as primary security.

Generally CC limit amount is calculated by the bank as a percentage of sale and stock along with financial statements. For example a bank allowed cash credit limit up to 80% of stock plus 20% of sales or turnover of the business.

OD limit amount is calculated on the basis of financial statement and market value of the property offered as a security.

Drawing power limit specified by the bank on monthly or quarterly basis.

There is no drawing power limit.

Stock & Debtors statement, GST return is required to be submitted to the bank on monthly or quarterly basis.

After approval financial statements are generally not required to be submitted to bank.

CC limit should be used for the business purposes only.

OD limit can be used for any purpose but not for speculation or illegal activity.

CC limit does not reduce over a period of time.

In case of drop down OD limit there is monthly reduction in amount of overdraft.

CC limit rate of interest is lower than OD limit.

OD limit interest rate is higher than CC limit.

 

 

 

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