Fund Based Cash Credit limit/Overdraft facility:
Cash Credit limit/Overdraft facility is to meet your daily business requirements to run efficiently. The working capital finance products are framed to facilitate the liquidity position of the businesses. Specifically, for SMEs and start-ups, generating a stable stream of income is of supreme importance for business sustainability. Interest is only paid on the amount used, even if the authorized limit is higher.
NON-FUND BASED Letter of Credit:
Letters of Credit (LC) is a non � fund-based credit facility. It is a trusted instrument for settling international trade transactions irrespective of whether you are an exporter or an importer. In short it is a document that guarantees the buyer s payment to the sellers. It is Issued by a bank and confirms the timely and full payment to the seller. It is issued against a pledge of securities or cash or deposits.
Bank Guarantee facilitate growth in trade and commerce and play an important role in promoting international and domestic trade. Bank Guarantee acts as a undertaking assuring the beneficiary that the bank would pay the specified amount, in case of its applicant�s default in delivering the financial or performance obligation as mentioned in the guarantee. The entire transaction is between two banks, not the bank and customer; as one bank is the issuer and other bank is the guarantor. It Can be issued against limits, security deposits/Fixed deposit,
Trading the bill before it becomes due for payment at a price less than its face value, where the seller gets immediate liquidity and the buyer gets credit at a reasonable cost. This type of credit facility aids businesses in increasing their sales and managing the receivables proficiently. Basically, this form of the facility will save your business from the cash flow pressure while giving you some breathing space.