Saraogi Manav & Co.
Chartered Accountants
CMA data and working capital assessments for Cash Credit facility applications.
A Term Loan is restricted to acquiring fixed assets, such as land or machinery. Day-to-day operations, such as purchasing raw materials or paying creditors, require a different form of financing. A Cash Credit (CC) Facility addresses this working capital need.
Securing a CC limit requires supporting documentation of the working capital cycle and projected turnover. We prepare the CMA (Credit Monitoring Arrangement) Data and financial projections required by banks to sanction CC limits.
Banks calculate CC eligibility based on working capital metrics, typically capping the limit at 25% of estimated annual turnover (with the bank funding 20% and the borrower providing a 5% margin). We prepare 3-to-5 Year Financial Projections covering:
Audited financials and tax returns from previous years.
Provisional data reflecting current operational scale, based on GST returns and bank statements.
Forecasted growth and operating cycle calculations to support the requested CC limit.
Documentation typically required for a Cash Credit application:
Certificate of Incorporation, Partnership/Trust Deed, Business PAN, Udyam Registration, Registered Address Proofs, and Trade Licenses.
Last 3 years of ITRs and audited financial statements, last 12 months of GST returns, and recent bank statements.
A Cash Credit facility involves ongoing post-sanction compliance requirements:
The CC limit is secured against current assets (stock and debtors). We assist with execution of collateral deeds and stamp paper procurement for hypothecation.
Banks require hypothecated stock to be insured against fire and perils. We assist with documenting and filing this with the branch.
Banks require monthly certified declarations of stock and book debts to calculate drawing power (DP). We prepare and certify these statements.
Cash Credit limits are renewed annually. We prepare updated CMA data, projected financials, and progress reports for renewal or limit enhancement.
Contact our office to discuss this service for your business.
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