1) Businesses need regular cash inflows to take care of their day-to-day operations. If the working capital requirements are not properly met for a business, it could severely affect its smooth business operations. Cash credit loans, or working capital loans, are developed to take care of these business requirements. The business may use these funds for any kind of operational expenses including raw material procurement, machinery purchase, overhead costs, debt settlement, inventory costs, etc.
2) Companies that take cash credit loans must provide collateral to the lender. Even assets like inventory, work-in-progress goods, etc., can be hypothecated in returns for a cash credit loan. Businesses typically have a running account with a particular lender for cash credit loan and use funds from the account whenever the need for working capital arises. Let's check out the different aspects of cash credit loans and the different lenders in the industry who offer these loans.