It is the documentation for utilisation of resources in near future. Basically this document is required for approval of bank loan and others. Bank want to see how you will invest the loan in your business and how will you pay the EMI and interest. The project and estimate are required for both the term loan and Cash Credit (CC) loan. By going through it lenders identify the risk and reward of their investments.
🗸 Income Tax file for latest year (if available)
🗸 Loan amount
🗸 Loan Interest Rate
🗸 Type of loan, either CC loan or term loan or both
🗸 Period of Loan in case of term loan
Cash Credit is a short term loan approved by banks for businesses, financial institutions and companies to meet their working capital requirements. The borrowing company can take money, even without a credit balance, upto whatever borrowing limit exists. In this loan the borrower does not require to pay an EMI. He has to use his CC loan account for buying and selling of his goods. The bank shall charge interest on outstanding balance.
A term loan is a simply a loan that is given for a fixed duration of time and must be repaid in regular instalments. These loans usually extended for a longer duration of time which may range from 1 year to 10 or 30 years. Basically this loan is provided to purchase the fixed assets like plant & machinery, construction building etc.
