difference btw cash credit and term loan

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Gaurav Gupta (Querist)

05 April 2010 Sir
Please tell the difference between the term loan and cash credit and what is period for repayment of such type of loan?

If anyone what to set up its own industry in iron scrap melting industry then bank can give such loan to an individual without any balance sheet, but he having project report for it.

Please advice me Sir,

CA SIDHARTH HIRALAL PATNI

CA SIDHARTH HIRALAL PATNI (Expert)

05 April 2010
term loan has a period of 5 to 7 years.
CC is renewed year by year and its limit can be enhanced

Gaurav Gupta

Gaurav Gupta (Querist)

06 April 2010 Please tell the difference between the term loan and cash credit and what is period for repayment of such type of loan?

If anyone what to set up its own industry in iron scrap melting industry then bank can give such loan to an individual without any balance sheet, but he having project report for it.

Please advice me Sir,

CMA.Palani Arumugam

CMA.Palani Arumugam (Expert)

06 April 2010 Term loan is generally taken for a long period and has the repayment in installments

However, CC limit is only for one year. It needs to renewed every year based on the financials.

If the fund is required for purchase of capital assets, then the bank gives the term loan.

If the fund is required for meeting the working capital requirement, then the bank gives the CC limit.

Project report / CMA data is essential for putting up the proposal. However, if the company is a new, the balance sheet may not be essential. However the bank may ask for the collateral security for such loan/cc limit.

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Gaurav Gupta

Gaurav Gupta (Querist)

08 April 2010 Thank sir

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