Overview – Working Capital Working capital is the difference between current assets and current liabilities. It pertains to the amount by which current assets exceed current liabilities. Current assets encompass cash, inventory, accounts receivables, and other assets that can be converted into cash within a year. Conversely, current liabilities refer to the company’s short-term obligations, including accounts payable, taxes, and other expenses due within a year. In this article, we will explore valuable insights into working capital management, ensuring smooth operations and financial stability. Working Capital = Current Assets – Current Liabilities What is Working Capital Cycle? Working capital holds significant importance for businesses across various industries, including services, manufacturing, trading, and agriculture. It is particularly crucial for cash and carries businesses. The working capital cycle represents the duration it takes for a business to convert input resources into cash through the process of production and sales. These inputs can encompass raw materials, electricity, wages, and administrative salaries. When analyzing the working capital cycle, two key aspects should be considered: The industry-specific  The company’s operations specific A shorter working capital cycle enhances cash flow and reduces the risk of customer payment defaults, making it a desirable goal for businesses. What is the necessity of Working Capital? There are two primary situations where working capital becomes necessary. One is when your current liabilities (especially creditors) are more Or immediately payable than your current assets (especially debtors) are late receivable. So, In simpler terms, when you have to pay your creditors immediately while your debtors take their time to settle their payments. This situation poses a challenge for your business. In the long run, this may hit the cash flow of the company, you need to fix it immediately. Another condition is where your work orders have increased to a substantial level. So as the company grows, there is an increase in demand for the product. To manage the high demand, you must secure the necessary working capital. Learn the process of facilitating working capital Loans from the case study, here. Key components of Working Capital Cycle 1. Current assets: These are assets that can be quickly converted into cash within a year, such as cash and cash equivalents, accounts receivable, inventory, and short-term investments.  2. Current liabilities: These are liabilities that need to be settled within a year, such as accounts payable, short-term loans, and accrued expenses. 3. Operating cycle: This is the time it takes for a company to convert its inventory into cash, such as the time it takes to purchase raw materials, manufacture and sell products, and collect payment from customers.  4. Cash conversion cycle: This is the time it takes for a company to convert its investments in inventory and accounts receivable into cash, minus the time it takes to pay off its accounts payable.  5. Net working capital: This is the difference between a company’s current assets and current liabilities, and it represents the amount of capital available for day-to-day operations. Significance of Adequate working capital: Adequate working capital is always best for the company. When a company approximately uses its assets, it can efficiently operate the business. The salary payments, daily expenses, or wage payments are never delayed and all the work is effective. Adequate working capital helps reduce the wastage of resources and benefits the goodwill of the company. What happens if working capital slips? For a business to function smoothly, it relies on its working capital. As cash flow is essential for any business to thrive and it serves as the lifeblood of the company. So, it is essential to have sufficient working capital to ensure continuous operations and growth. On the other hand, deficient working capital can lead to various challenges such as delayed payments of salaries and wages, difficulty in managing day-to-day operations, and other complications. To avoid such hindrances, it is crucial to maintain sufficient working capital. Collateral-Free Working Capital Funding In cases where a company urgently requires working capital, it can opt for collateral-free working capital funding. Terkar Capital recognizes the significance of efficient cash flow for businesses to thrive and operate seamlessly on a day-to-day basis. Thus, for companies that require working capital urgently, Terkar Capital is a perfect choice. During financial crises, we assist businesses in swiftly raising funds to meet their working capital needs through various collateral-free financing options such as NBFCs, equity capital, financial aid from relatives and acquaintances, applying for business grants, or seeking assistance from financial institutions.

Overview Having a hard time managing your finances? Rapidly accumulating debt used to be a cause for concern. But times have evolved, and borrowing money and making regular payments has become a common practice in a society driven by consumerism, which forms the basis of economic advancement. A business doesn’t solely rely on debt to address its deficits; it also utilizes it to thrive, expand, and fulfil unexpected needs. In fact, there are numerous financial benefits associated with business debt. Here are the financial benefits of business debt 1. Scaling up your business When you have cash flow, your enterprise is exposed to more opportunities like promoting itself and using effective marketing strategies. The funds can also be used for the acquisition of equipment and facility purchases. It can expand its range of product offerings. Money supply gives a chance for a business to spread its geographical boundaries. It helps in growing business in all aspects, i.e., finance, manpower, and technology. 2. Building Credit Score 35% of your credit score is based on your repayment history. The creditworthiness of the company can be enhanced by taking out a business debt. But to raise your credit score, you must ensure that debts and EMI payments are made on time and by the specified date. This will enable you to obtain additional funding in the future at a reduced cost. Learn the key factors affecting your CIBIL score here. 3. Leveraging Debt-Equity Ratio The debt-to-equity ratio evaluates your company’s overall debt in relation to the capital that the owners initially invested and the profits that have been held over time. A higher D/E ratio among firms of a comparable size denotes greater risk, whereas a very low one can signify that a company is not utilizing debt funding for expansion. Compared to share capital, debt is also a preferable source of funding for a successful organization since it allows for more leverage. An investor for your business might expect profits but in the case of a debt, you just need to pay a fixed sum to the lender. You get benefits from the excess rate of return above the borrowing interest you pay. A large business debt also provides us with leverage by paying off minor creditors. You might not have to deal with as many parties if you combine several minor debtors into one large one. 4. Managing Cash flow A business has several challenges, like managing clients who don’t pay for services and having unsold inventory that needs to be moved to bring in new items. Cash flow is one of these issues. The frequent expenses for your workers, merchandise, utilities, rent, or mortgage make these problems much worse. A short-term debt might help your company survive lean times by giving you money to cover routine operating expenses. You may continue to bring in new clients to increase income and offset other losses by keeping money moving through your company. 5. Tax benefits Taxes for your business might be costly. If not paid properly, your company’s prospects and financial security are in jeopardy. You may also avoid some taxes by using business financing such as taking a debt. This is so because the Income Tax Act has provisions stating that the portion of earnings used to pay back the debt amount is tax-exempt. Thus, it serves as a useful tool for Enterprises to reduce their tax obligations and use the money saved for company growth. 6. Emergency Fund Requirement When an unexpected occurrence has had a detrimental impact on your firm, you might employ an emergency business loan. If a lender is persuaded that you will stick to the agreed-upon repayment schedule, they will provide a loan for the following reasons: short-term expenses for marketing or advertising to assist with running costs (staff wages, bills, rent) You might utilize an urgent business loan to bridge gaps brought on by cyclical market times to support seasonal firms. To cover unforeseen costs, such as debt repayments and insurance payouts 7. Funding Support Even it is collateral Unsecured and secured debts are the two different categories of debt. Taking up a secured debt entails pledging an asset as collateral. Holding an asset as collateral brings additional funding for your business which will have considerably more time value of money than monthly instalments, it can be helpful to expand your business operations. The debt amount is determined by your requirement and can cover any additional expenses coming as an obstacle to a big opportunity for your business. Business Debt Funding at Terkar Capital Business debt can bring several financial benefits. Firstly, it allows for business expansion, enabling opportunities for marketing, equipment acquisition, and product diversification. Additionally, taking out business debt and making timely repayments can enhance your credit score, facilitating future funding at lower costs. Leveraging the debt-equity ratio can help your business grow and manage risk effectively. Moreover, business debt assists in cash flow management during challenging times and offers tax benefits. Finally, it can serve as an emergency fund and provide funding support, whether secured or unsecured.

Unsecured Debt Instruments for Business Growth For financial decision-makers, accessing the right funding is crucial. As a result, Unsecured Debt Instruments offer a pathway to raise finance without the need to pledge assets as collateral. In order to determine eligibility and interest rates, lenders evaluate various factors, including credit history and income. Furthermore, interest rates can fluctuate based on financial standing, industry, and market conditions. While unsecured debt instruments offer flexibility, they typically carry slightly higher interest rates compared to secured funding. Key Unsecured Debt Instruments in India Several unsecured debt instruments are vital for businesses in India, enabling them to manage short-term needs and fuel expansion. These include Trade Finance, Term Loans, Overdrafts, Cash Credits, Bill Discounting, Factoring, Bank Guarantees, LC Discounting, CTGSME, and Working Capital Loans. Many Indian businesses utilize these options to address unforeseen expenses during their growth journey. Get up to 10 Cr in Unsecured Debt Funding. The ROI begins at 14% PA (Subject to Financial Ratios). Global market scenario After the unprecedented challenges on account of the covid 19 pandemic in both FY 2021 and Q1 FY 2022, the lending landscape in India has shown remarkable recovery for the remaining part of FY 22. As per the reports, the Global Unsecured debt market in 2022-2026 is poised to grow by $ 5. 85 billion during 2022-2026, accelerating at a CAGR of 16%. It also identifies the key driver for the unsecured debt market, i.e. increasing number of SMEs. Unsecured funds are becoming more online and quicker. Advanced technologies are used in the process, leading to a large increase in demand. Indian Market Scenario In India, overall business loans provided Rs.621.1 thousand crores in the financial year 2022. Reserve Bank of India showed that bank lending to such companies increased 26% year-on-year in October. Financial companies other than banks also provide loans to such companies. Thus, a total of 11.6 million MSMEs received new loans in FY2022. Unsecured business loans granted by NBFCs also jumped 36% year-on-year in the second quarter of FY23, according to data from the Finance Industry Development Council, an industry body for NBFCs. The average loan made to a medium-sized enterprise stood at Rs. 1.4 crore in the final quarter of FY22.  Loans to small and micro-sized businesses, had a ticket size approximately of Rs.59 lakh and Rs.9 lakh, respectively. When it comes to the fulfilment of capital market needs, it becomes a more complex and time-consuming process due to the wider range of options available. Therefore ‘The Global unsecured business loans market is bifurcated on the basis of Type of enterprise, Industry Vertical, Enterprise Size, and Region. The Role of Financial Literacy In this world of emerging financial trends and the increase in the importance of financial literacy, businesses are able to grow easily and focus on operational expandability due to the easy availability of fund flow. As the awareness of investments and borrowings are available at consumers’ fingertips, the right spread of knowledge helps them to understand the right opportunity to borrow as well as invest so that they can benefit from the spreading availability. Unsecured Debt Instruments at Terkar Capital At Terkar Capital, we offer a comprehensive suite of tailored and accessible funding solutions, encompassing all available unsecured debt instruments in the Indian market. As a result, our experienced team streamlines the entire process, from understanding your needs and designing solutions to fund disbursement and subsequently providing ongoing support for repayments and future funding requirements. Check out the Global Unsecured Business Loans Market scenario 

MSMEs In Pharmaceutical Sector The pharma industry in India is highly innovative and entrepreneurial. Along with its roots in the sector, the Geo-economic healthcare landscape has been significantly altered by new startups in the traditional space. Thus more contributions need to be made to bring forward an overall larger set of solutions through a focused research and development process. For this, MSMEs in the pharmaceutical sector require funding to grow.  With factors such as a product pipeline, access to a specialized talent pool, and a large pool of patients to add to clinical needs, the pharma ecosystem is poised to meet multifaceted healthcare needs. Thus government policies along with various schemes should be geared towards accelerating such innovations and ground-level growth to provide problem-solving solutions at the base level of the society’s pyramid. And further reducing their dependence on obsolete processes and increasing access to affordable health care. Thus, in these circumstances, capital funding should never be a concern to gear up the MSMEs in the pharmaceutical sector. Apply the financial instrument for MSMEs in the pharmaceutical sector. Government schemes for MSMEs in the pharmaceutical sector The pharma industry is a very important sector of the economy. Its importance has risen significantly since the covid 19 pandemic. It is difficult to run the industry without sufficient funding. Thus strengthening MSMEs in the pharmaceutical sector has become the need of the hour. Keeping this in mind government of India launched 3 schemes to make the pharma industry Atma nirbhar, additional resilient and future-ready. Those are as below – PTUAS Scheme  API-CF Scheme PMPDS Scheme The scheme provides for credit-linked facility capital and interest for subsidy within the pharma sector. The objectives of the schemes launched under the banner Strengthening Pharmaceuticals Industry include  Technology up-gradation Setting up common research centres  Operating effluent treatment plants in clusters for pharmaceutical MSMEs.  Support of up to Rs 20 crore each for the common facility.  SIDBI is going to be the project advisor for implementing these schemes. 1. PTUAS – Pharmaceutical Technology Upgradation Assistance Scheme This scheme would facilitate pharmaceutical MSMEs with a well-tried track record to upgrade their technology. The scheme has provisions for a capital grant of 10 percent on loans up to a maximum limit of Rs 10 cr. And with a minimum compensation amount of 3 years or interest subvention of up to five percent (6 percent in case of units closely held by SC/ST) on a reducing balance basis. 2. API-CF – Assistance to Pharma Industries for Common Facilities Scheme Helping pharma Industries with the Common Facilities scheme (API-CF) would strengthen the prevailing pharmaceutical clusters’ capability for sustained growth. It provides for the help of up to seventy percent of the approved project value of Rs 20 crore, whichever is a smaller amount. 3. PMPDS – Pharmaceutical and Medical Devices Promotion and Development Scheme The pharmaceutical and Medical Devices Promotion and Development scheme (PMPDS) would involve the preparation of study reports on topics of importance for the Indian pharma and medical device industry. The scheme is geared toward making information about the pharma and medical device sectors. So the industry can keep upgrading to cater to evolving necessities across international markets. At a conclusion The pharma industry is one of the most important sectors of the business economy. Due to this, a lot of emphasis is being laid on the working of MSMEs in the pharmaceutical sector. It is also a growing industry as many more pharmaceutical companies are looking to expand their business. To expand, the industry requires raising funds for the pharma businesses. Terkar Capital caters to the required cash flow for the growth of MSMEs in the pharmaceutical sector. So, reach out to Terkar Capital for financial facility arrangements.

Investment Banking Services in India India is considered to be the fastest-growing market and the most important market in Asia. To address various challenges in front of the Indian economy, investment banking firms develop and offer more comprehensive financial instruments for business situations. Their activities include capitalizing new debt and equity securities for all types of corporations. Thus, the firm is reputable for its extensive knowledge of public offerings and private placements. Here’s what you need to know about investment banking services in India and how the firm helps you navigate the complex world of finance. An investment banking firm is to raise debt and equity funds. It facilitates the business expansion of its clients through: 1. Private Equity (PE Funding) Private equity firms raise significant funds and provide significant capital to a company. This type of investment is particularly suitable for companies that require significant amounts of capital and have substantial growth potential. However, In exchange for its financing, private equity often takes control of a large percentage of ownership in a company. A PE firm may provide additional management and financial expertise to help take a business to its next level. The company benefits from PE’s industry knowledge, greater access to cash flows, and increased marketability. For investors, it provides diversification by spreading risk across multiple investments. In addition to providing capital and expert advice, a private equity firm can also assist with restructuring or refinancing debt when necessary. This can be particularly helpful if a company is struggling with high-interest payments. Or other debt-related issues, also. 2. Debt Fundraising Banks are required to hold a certain amount of cash at hand. The minimum required is known as the Statutory Liquidity Ratio or SLR. It restricts their ability to lend. As these loans get repaid, banks have more money available for lending, allowing them to extend new loans. This can be viewed as the recycling of funds from one borrower to another borrower. Hence, this activity is called debt fundraising. Investment bankers play an important role in it. They help companies raise funds by issuing corporate bonds and other instruments. So, it represents claims on future cash flows generated by a company’s assets. So, with their expertise and deep understanding of financial markets, investment bankers can help companies navigate the complexities of debt fundraising and secure the funding to achieve financial goals. Learn the Statutory Liquidity Ratio here. 3. Mergers and acquisitions Mergers and acquisitions are an essential part of investment banking. The investment banker will use their expertise to guide a company through an acquisition process and provide guidance on valuations, corporate strategy, due diligence, debt financing, and capital raising. Analysts at investment banks play key roles in advising companies about mergers, acquisitions, and divestitures. 4. Leasing Financial intermediation, also known as leasing, refers to the process of a company obtaining funds from banks or investors and subsequently lending them to smaller enterprises. The smaller firms utilize the borrowed funds to finance their business expansion or meet other expenses. 5. Compliance Advisory As a risk advisory or compliance advisory professional, you focus on evaluating, managing, and mitigating risks for clients. By helping banks and financial institutions comply with regulations and assess risks, you can safeguard your clients’ interests from fraudulent practices. Increase their profitability and security as well. At a Conclusion Terkar Capital is an investment banking firm in India that raises debt and equity funds and helps businesses expand. We work exclusively with businesses to raise funds from a variety of sources, including both Indian and international markets. Terkar Capital offers a variety of conventional and non-conventional debt and equity investment banking services to our clients, tailored to their specific needs, strengths, and weaknesses. We are headquartered in Pune and have a corporate office in BKC, Mumbai. However, we operate in major cities across India to meet the investment banking needs of our clients.

Introduction In today’s fast-paced world, people are struggling with unpredictable situations. Such as financial disputes, public emergencies, uncertainties in the financial sector, securities exchange crashes, etc. So, even if their best efforts, they may find themselves financially constrained. In situations like this accessing debt fund exposures becomes crucial. There can also be a situation wherein, despite the lack of urgency, you fall short of funds for planned expenditure. In these situations, the best recourse would be to avail of debt fund exposures such as an unsecured business loan, term loan, LAP facility, enhancing CC (Cash Credit) / OD (Overdraft Facility), and more. But regardless of the type of loan, approval depends primarily on your CIBIL score. So, let’s get insights into Factors Affecting the CIBIL Score and Their Impact on Loan Eligibility. What is the CIBIL score? A CIBIL score is the first impression of the borrower for the lending institution. Simply put, the score demonstrates your financial soundness and can assist you in quickly getting the loan of your preference. Alternatively, if your credit score is not in the ideal range, you are more likely to be denied a loan or get a higher interest rate. Therefore, before you apply for a loan, it is essential that you check your CIBIL score. Factors Affecting the CIBIL Score: Financial institutions assess your CIBIL score based on specific factors. These factors are crucial in determining your creditworthiness and include: 1. Credit Reimbursements Pattern: 2. Reimbursement Capacity: 3. Interest Rate and Loan Amount Calculation: 4. Working Capital Arrangement: 1. Credit Reimbursements Pattern: Using the CIBIL score, a lending institution can know your previous patterns regarding credit reimbursements. If you have repeatedly defaulted on your EMI obligations in the past, it does not reflect well on your creditworthiness. 2. Reimbursement Capacity: Any lending institution must differentiate between high-risk and low-risk borrowers. A good CIBIL score indicates a low-risk borrower who has the capacity and financial discipline to reimburse the credit. 3. Interest Rate and Loan Amount Calculation: Once the lending institution realizes your CIBIL score, it will then use it to calculate the interest rate and determine the actual amount of loan to be disbursed. Individuals with good credit scores can expect reasonable rates of interest along with disbursal of the required loan amount.    4. Working Capital Arrangement: How well do you arrange your working capital out of the available credit facility? and justify all the stakeholders.   Does a low CIBIL score mean the end for the borrower? If your credit score is low, you may find it difficult to get an unsecured business loan from the banks. But a low credit score isn’t the end of the world. A decent credit score is essential for credit endorsement. However, if the score check reveals low numbers, it does not mean that you have lost all chances of getting credit at affordable rates. You can take some necessary steps to increase your score over the long haul. How to Improve CIBIL Score? Boosting your CIBIL score requires consistent effort and sound financial management. Implementing proactive measures can gradually enhance your creditworthiness and improve your eligibility for loans.  Coming to Conclusion: Understanding how your CIBIL score affects your loan eligibility is crucial in today’s financial landscape. A good CIBIL showcases your commitment to financial responsibility. However, a lower score does not spell disaster. Those who effectively manage their finances tend to have higher CIBIL scores, enabling better loan opportunities. On the other hand, borrowers with low scores may face challenges in repaying loans.

Working Capital Finance – Overview Working capital finance helps businesses cover essential expenses like daily operations, raw material purchases, wages, utility bills, and payroll, rather than capital expenditures on equipment or machinery. It is especially beneficial for businesses with inconsistent cash flow or those in a growth phase, taking on larger projects. This type of financing provides the necessary liquidity to maintain smooth operations and seize new opportunities. The Role of Working Capital Generally working capital comes into the picture, whenever there is a gap between the debtors and creditors cycle. E.g., You’re the manufacturer of the X component used for 2-wheeler assembly. To manufacture this X component you need to purchase the raw material, and probably you need to pay upfront to buy the raw material. However, the conversion of that raw material to cash may take the time of 45 days. In this case, you need the working capital to bridge the gap between the purchase of raw materials and the sale of the finished products. Working Capital Flexibility It is a simple solution business take up that helps in keeping up with the work cycle. Working Capital is the difference between the company’s current assets and its current liability. It is one of the very flexible options to opt for as it proceeds with minimum documents in a short period. One can opt for a working capital loan in both secured and unsecured ways depending upon the availability of collateral. Working Capital Finance Cycle This term refers to the time it takes for a company to convert its net assets and liabilities into cash. A shorter working capital cycle is favourable as it allows businesses to unlock their cash more quickly. On the other hand, if the conversion process takes longer, there will be a higher need for working capital. Therefore, companies must strive for a shorter turnaround time to optimize their working capital requirements and ensure smoother cash flow. Therefore, it becomes imperative for businesses to focus on optimizing their working capital requirements through effective management of the working capital cycle. By doing so, they can ensure smoother cash flow and enhance their overall financial performance. Types of Working Capital There are various types of working capital loans available from which a business can select as per their requirement. Most banks offer similar types of Working Capital Loans. These are:  Overdraft Facility or Cash Credit Invoice Factoring Bill Discounting Letter of Credit Bank Guarantee Benefits of Working Capital Facility It can help businesses boost their day-to-day activities and meet the short-term requirements of the business. The businesses can eliminate the collateral and opt for an unsecured working capital loan as it is not always justified to put your assets at risk. This will eliminate the requirement for collateral and the business will be able to flourish in its operations. The procedure for getting a working capital loan is very flexible. So, you can easily apply at Terkar Capital to get the best solutions for funding. Thus, as a result, the process will get easier and funds will be disbursed faster. It helps you to maintain a good cash flow for the business. Thus it turns to result in strengthening the financials and gaining stability in the business whenever there is an unexpected requirement. It offers a very flexible and easy repayment option. Working capital also fulfils cash requirements in an emergency. So, it gives much-needed leverage to the business to take up the risks. Read more about the process of Working Capital Financing from the case study. Why Terkar Capital? Terkar Capital provides loans specifically designed for MSMEs to support their financial needs. However, working capital finance is a common solution offered by Terkar Capital, enabling businesses to cover day-to-day expenses like raw material purchases, wages, and bills. This type of financing bridges the gap between the purchase of raw materials and the sale of finished products, ensuring smooth operations. We offer both secured and unsecured working capital loans with minimal documentation requirements, allowing businesses to access funds quickly. FAQs on Working Capital Finance 1. What is the tenure in working capital finance? Working capital finance is a short-term loan. It is mainly used for managing the operational expenses of a business. Normally, the loans are offered for 12 months. So, the criteria depend upon the lender. Also the requirement of the borrower. 2. How much is the interest charged? The interest depends upon the amount of the funds, the creditability of the borrower, and the repayment history of the borrower. Hence, the interest differs from case to case and lender to lender. 3. Which working capital instruments do we offer? Terkar Capital arranges a variety of financial products in debt funding. We assist the clients in choosing the best suitable one. 4. How is the repayment criteria in working capital finance? The repayment criteria depend upon the mutually agreed terms and conditions between the buyer and the lender. It can be through EMIs or as and when the borrower gets cash. 5. Who provides a working capital finance facility? The banks, NBFCs, and financial institutions provide the working capital facilities. The eligibility, repayment terms and documentation vary according to the respective lenders. We help to bridge the gap between eligible borrowers and capable lenders.

Dropline Overdraft (DLOD) meaning Dropline Overdraft (DLOD) is a facility granted to the customer by the financial institution where businesses can overdraw from their current account up to a limit that is agreed upon by the banker. An Overdraft Facility is one of the most efficient forms of borrowing as one needs to pay interest only for the amount of money withdrawn. A dropline overdraft is almost similar to an Overdraft in all cases except the availability of the limit. This withdrawal limit reduces each month from the sanctioned limit. However, the calculation of the Interest rate is done daily and it is charged at the month’s end. You will be charged only for the amount used, So, you can always park your funds in a virtual account whenever funds are not in use. Important features of Drop line Overdraft: It can come in as both forms of loan i.e. Secured loan and Unsecured loan. In case one opts for an unsecured dropline overdraft, there is no requirement for any collateral. DLOD is a hybrid of both term loans and overdraft facilities. The sanctioned limit reduces the withdrawal limit monthly. The facility is only available for the current account. Thus, the bank credits only the amount to the current account. Every month, the bank charges interest on the amount withdrawn, however, calculating it daily. DLOD is the best facility for manufacturers, retailers, traders, and service providers. There are no kind of yearly renewal charges levied. Read more about Overdraft Facility – Meaning, Advantage, and Significance, Here. Who is eligible for the Dropline OD facility? Any entrepreneur, proprietor, self-employed professional, a private company, or partnership firm will get access to the DLOD facility. Understand the difference between overdraft facility and cash credit here. What are the documents needed for the DLOD facility? To avail of a Dropline Overdraft, you’ll typically need to provide the following documents: 1. General requirements A. KYC Documents of borrower and co-applicants Aadhar Card PAN Card 2. Statutory documents A. In the case of Proprietary Firm Shop Act GST certificate Udyog Aadhar certificate B. For a Partnership Firm Shop Act GST certificate Udyog Adhar certificate Partnership deed C. In the case of a Private limited company: Certification of incorporation  AOA MOA 3. Income documents Last 3 years Financials (audited) Last 3 years ITR Existing loans status 1-year Banking Considering a Dropline Overdraft? For those seeking a dependable financial institution to access the Dropline Overdraft facility, Terkar Capital is the preferred choice. We are dedicated to facilitating Financial Instruments and will make sure you have a hassle-free experience in availing of the capital.  Our operational efficiency, coupled with a commitment to transparency, confidentiality, and professionalism, positions us as adept debt fund arrangers. Terkar Capital stands prepared to serve your financial needs promptly and effectively, ensuring satisfaction in every aspect of the process. Learn in detail about an Overdraft facility.

Cash Credit and Overdraft Difference When it comes to running a business, working capital is crucial to keep things going. That’s where finance comes in handy. The Cash Credit and Overdraft are two types of short-term loan facilities. It can give you a quick boost, while long-term options like LC, BG, factoring, and business loans can help you plan for the future. Lenders offer businesses two types of short-term loan facilities: cash credit and overdraft. An overdraft facility is also offered to individuals based on their relationship with the bank. Let’s learn the difference between cash credit and overdraft facility. Bank Overdraft Facility OD is a facility wherein a bank allows customers to borrow a set amount of money. There is interest on the loan, and there is typically a fee per overdraft. Thus, the Overdraft facility is giving current accounts to customers. So, the customers can withdraw the funds even after the account has zero balance. OD is like any other loan. The account holder pays interest on it and will typically be charged a one-time insufficient funds fee. There are different types of overdrafts: 1. Standard Overdraft Standard Overdraft is withdrawing more funds than the account limit. So, the bank that permits overdrafts typically charges you a small fee for the service. 2. Secured Overdraft It is like a traditional Loan. As financial institutions lend credit a wider amount of collateral is used to secure the funds. 3. Clear Overdraft In this no separate security is present but the overdraft is given based on the individual’s net worth. CC Facility Cash credit is commonly offered to businesses rather than to individual consumers. Customers can use the cash credit for routine banking transactions up to the credit limit. Thus, in the following situations, CC can be used to meet the working capital gap: Purchase of Raw Materials Maintain inventory Finance, sales, and other activities Warehousing, storage, etc. Rent, electricity, bills, etc. Key Difference between Cash Credit and Overdraft Facility   Bank Overdraft Cash Credit Meaning The facility offered by the bank to withdraw more than the account limit permits Short-term funding extended by FI to meet daily working capital requirement Purpose To do operations of the business To get raw materials, maintain storage, pay bills, etc. Tenure Long Term Short Term Interest rate It is calculated on only the amount used It is calculated on the entire amount withdrawn Bank Account The current account of the owner’s bank  Need to open a separate account Burrowing Limit It is decided on the basis of collateral and financials    The cash credit limit is decided on the basis of inventory and stock volume. The general rate of Int. Higher Lower Amount withdrawing limit Decided on account and relation with FI Up to 60% value of receipts and inventory Why Terkar Capital? Understanding the difference between cash credit and overdraft facilities is crucial for businesses, particularly MSMEs, which frequently struggle with working capital management. To address this, Terkar Capital offers a range of overdraft options, such as standard, secured, and clear overdrafts. These facilities are tailored to meet diverse business requirements and enable effective working capital management, just like cash credit facilities. Each loan option caters to specific business needs, allowing MSMEs to efficiently manage their working capital. By comprehending the differences between cash credit and overdraft facilities, businesses can make informed choices that align with their unique requirements.