Meaning of terms and differences
This query is : Resolved
02 July 2012
WHAT IS THE BASIC DIFFERENCE BETWEEN CASH CREDIT & TERM LOAN?
PLEASE EXPLAIN BRIEFLY WITH ITS MEANING?
PLEASE EXPLAIN BRIEFLY WITH ITS MEANING?
Rathin Roy
(Expert)
03 July 2012
Cash Credit is a facility provided to finance working capital requirements, i.e. to finance Current Assets like Stock and Debtors. Term Loan is given against purchase of specified fixed assets - the repayment is usually in instalments and over a period of time e.g. quarterly payment for 3 years (12 instalments).
Thus Cash Credit utilisation is a Current Liability while Term Loan is non-current. Both limits are separately sanctioned by banks.
Thus Cash Credit utilisation is a Current Liability while Term Loan is non-current. Both limits are separately sanctioned by banks.
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