Revolving
A limit you draw against and replenish, reviewed and renewed periodically, usually annually.
Business & working capital · Loan guidance
Cash credit, explained.
A running working-capital limit drawn against stock and receivables, renewed periodically.
What it is
The instrument, in plain terms.
A short-term working-capital facility on a current account, where the drawable amount is set against a borrowing base of stock and debtors rather than a fixed loan amount.
It can suit
- Trading and manufacturing businesses with a stock-and-debtors cycle.
- Businesses that need a revolving limit rather than a lump-sum loan.
- Owners who can keep stock and debtor statements current and accurate.
It may not suit
- Businesses with little current assets to base a limit on.
- Long-term asset or project needs — that is term-loan territory.
The lender’s view
How a lender reads this.
Drawing power
The usable portion of the limit is set by stock and acceptable debtors, not by the sanctioned figure.
Quality of current assets
Old stock and ageing receivables reduce what the lender will count.
Financial statements
The lender reads the operating cycle to size the limit the business genuinely needs.
Renewal discipline
These limits are reviewed and renewed; submissions must arrive on time.
Lenders decide on their own assessment. Our work is to make your case complete, consistent and genuinely ready to be read.
Our work
What we prepare with you.
Accurate, current stock and debtor statements, maintained as a routine not a scramble.
A clear understanding of sanctioned limit versus drawable amount.
A calendar for renewal, with submissions prepared well ahead.
A watch on receivable ageing, before it starts eroding the limit.
Preparation
What a lender usually asks for.
- Stock and debtor statements, submitted on a regular cycle.
- Audited financials, income-tax returns and GST returns.
- Bank statements and details of existing facilities.
- Receivables listed by age, to establish what the lender will count.
- Identity and address proof, and guarantees where required.
- Security documents covering stock and book debts.
Mechanics
How it is usually structured.
The shape a lender will typically put around this facility.
Borrowing base
The usable amount is set by current stock and acceptable receivables, not by the sanctioned figure.
Security
A charge on stock and book debts, and often a personal guarantee.
Common mistakes
Where borrowers go wrong.
None of these are exotic. They are the ordinary errors that turn a workable requirement into a difficult application.
Assuming the full limit is drawable
Drawing power can sit well below the sanctioned limit, and varies through the year.
Letting receivables age
Slow collections quietly shrink the usable limit when they are needed most.
Missing the renewal
Lapsed renewal can suspend drawing on a limit the business depends on.
The full cost
What it costs, beyond the rate.
- Interest on usage
- Charged on the amount actually drawn, not on the limit.
- Renewal charges
- Payable at each periodic review, with submission requirements attached.
- Insurance
- Stock charged to the lender usually has to be insured.
- Non-submission
- Missing statements or a lapsed review can suspend drawing power — a cost with no invoice.
Language
Terms worth knowing.
- Drawing power
- The amount actually drawable at a point in time, based on current stock and debtors.
- Borrowing base
- The assets — stock and receivables — against which the limit is calculated.
- Renewal
- The periodic review at which the limit is reassessed and continued.
On rates
Why we don’t publish a single rate.
Pricing is set by each lender, not by us. Two borrowers approaching the same lender on the same day can be offered different rates, because the number reflects both the facility and the person behind it.
What moves the rate you are offered:
- Your credit record and how past borrowing has been serviced.
- The security offered, and how readily it could be realised.
- The tenure and the structure of the facility.
- Your income or business profile, and how well it is documented.
- The lender’s own cost of funds and internal policy.
- Fees, insurance and margin that belong in the all-in cost, not the headline.
A single advertised rate would misrepresent all of that. What we do instead is help you compare the whole cost, and understand what is actually negotiable in your case.
Questions borrowers ask
Why is my drawing power below my limit?
- Because the usable amount depends on current stock and acceptable debtors. The sanctioned limit is a ceiling, not a balance.
What happens if a debtor does not pay?
- Ageing receivables stop counting towards the borrowing base, which quietly reduces what you can draw.
Does it help to draw the full limit?
- No. Interest runs on usage, so drawing only what the cycle needs costs less.
Adjacent borrowing
Related options.
Borrowers considering cash credit often weigh these alongside it.
Overdraft
A limit on a current account you can dip into as needed and clear as money comes in.
↗Term loan
A long-tenure loan for a specific purpose — machinery, premises or a project — repaid on a fixed schedule.
↗Business loan
Funding for a running business, read from turnover, banking and vintage rather than from a single asset.
↗Begin here
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The Loan CA prepares and advises; it does not lend and cannot promise an approval. Every credit decision rests with the lender, subject to their assessment, documentation and applicable terms. The Loan CA is not licensed, registered or regulated by the Reserve Bank of India, and is not approved, endorsed by, or affiliated with the RBI or the Institute of Chartered Accountants of India (ICAI). Full disclosures →