Understand the difference between Cash Credit and Overdraft

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Understand the difference between Cash Credit and
Overdraft
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1.
What does cash credit mean?

• It's short term funding that helps businesses to
  meet their working capital needs.

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Know how cash credit works

• Available for a maximum period of 12 months.
• You can withdraw funds above the account's
  available balance.
• You need to renew the cash credit account after
  the term concludes.

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Key features of cash credit

• Available exclusively for businesses and after
  putting up collateral.
• Pre-specified terms and conditions.
• No restrictions on the number of transactions.

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What does overdraft facility mean?

• You can overdraw from your account up to a
  certain limit.
• Overdraft limit is pre-approved.

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Know how overdraft facility works

• Overdraft increases your account's outstanding
  balance.
• Partial repayment option is available.
• Following your repayment, you can again overdraw
  from your account.

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Key features of overdraft facility

• Also available on a joint account.
• Fee is applicable on the overdrawn amount.

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Key distinctions between cash credit and overdraft

• Cash credit is solely offered to enterprises,
  while overdraft is open to both businesses and
  individuals.
• Cash credit is based on inventory availability,
  whereas overdraft is based on the lender-borrower
  relationship.
• Cash credit is available at a lower interest rate
  than overdraft facility.

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1.
Similarities between cash credit and overdraft

• Interest calculation method and repayment pattern
  are same for both.

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• Both these funding alternatives have their own
  merits. Evaluate them thoroughly before making
  any decision.

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Hero Fincorp Limited
09, Basant Lok, Vasant Vihar, New Delhi -
110057
Tel [phone]
Email corporate_at_herofincorp.com
Website https//www.herofincorp.com/
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Cash Credit and Overdraft