Bank cc loan eligible

This query is : Resolved

Kollipara Sundaraiah (Querist)
Follow

25 March 2021 A small business person projected turnover details mentioned below as on 31-03-21.
Sundry creditors :2,00,000/-
Sunday debtors :1,50,000/-
Closing stock Rs:3,00,000/-
Capital Rs:3,00,000/-
Cash on hand Rs:50,000/-
Projected sales turnover Rs:30,00,000/-
Question:
A person how much cc loan eligible from bank for turnover based.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

12 July 2024 To determine the CC (Cash Credit) loan eligibility from a bank based on projected turnover and other financial details provided, we need to calculate the working capital requirement. Generally, banks provide CC limits based on a certain percentage of the projected turnover.

### Steps to Calculate CC Loan Eligibility:

1. **Calculate Working Capital Requirement (WCR)**:
- Working Capital = Current Assets - Current Liabilities
- From the details provided:
- Current Assets:
- Sundry Debtors: Rs 1,50,000
- Closing Stock: Rs 3,00,000
- Cash on Hand: Rs 50,000
- Total Current Assets = Rs 5,00,000
- Current Liabilities:
- Sundry Creditors: Rs 2,00,000
- Total Current Liabilities = Rs 2,00,000

- Working Capital = Rs 3,00,000

2. **Projected Sales Turnover**:
- Projected Sales Turnover = Rs 30,00,000

3. **CC Limit Calculation**:
- Banks typically provide CC limits based on a percentage of the projected annual turnover. This percentage varies and can range from 20% to 80% depending on the bank's policies, the industry, and the financial health of the business.

4. **Example Calculation**:
- If the bank offers a CC limit of 20% of projected turnover:
- CC Limit = 20% of Rs 30,00,000
- CC Limit = Rs 6,00,000

### Conclusion:

Based on the projected turnover of Rs 30,00,000 and assuming a conservative CC limit of 20% of turnover, the small business person would be eligible for a Cash Credit (CC) loan of approximately Rs 6,00,000 from the bank. Actual eligibility may vary based on the bank's assessment criteria, collateral provided (if any), credit history, and other factors. It's advisable to approach the bank for a detailed discussion and assessment of the business's financial needs and eligibility.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now