Cash Credit Loans: CMA Data and Drawing Power Explained

What determines how much you can draw?

A cash-credit sanction is an approved facility limit. Drawing power is the amount available against eligible assets under the lender’s assessment and sanction terms. Actual borrowing must stay within applicable limits. A sanction amount is therefore not a promise that the entire amount is always drawable. SBI describes working-capital facilities as tailored to the borrower, including cash credit and other instruments.

Prepare a consistent working-capital file

• Reconcile audited accounts, current management accounts, GST records and bank statements. Explain material differences rather than hiding them.
• Separate inventory by category and receivables by age. Identify disputed, related-party or otherwise ineligible balances for discussion with the lender.
• Explain customer payment terms, supplier credit, production time and seasonal peaks. Connect each projection to a stated operating assumption.
• Ask the lender which CMA schedules, assessment method, margins, reporting dates and exclusions apply. Do not assume one ratio or receivable-age threshold applies to every facility.

Illustrative interest calculation

If ₹1 crore remains utilized for 30 days at 12% per year, a simple actual/365 calculation gives approximately ₹98,630 interest: ₹1,00,00,000 × 12% × 30 ÷ 365. This is interest for that period, not an EMI. Changes in daily utilization, day-count convention, charges or compounding change the result. Use the lender’s statement and sanction terms for actual dues.

Does a strong current ratio guarantee approval?

No. Financial ratios are inputs to assessment. Repayment capacity, conduct, security and lender policy also matter. A ratio is not a guaranteed approval or interest-rate entitlement.

Can drawing power change after sanction?

Yes. The availability of funds can change under the facility’s reporting and eligibility rules. Ask how stock statements, receivable ageing and renewal conditions affect availability.

Discuss a ₹10 crore-plus requirement

CreditCares provides loan consultancy, with a Mumbai head office and Kolkata corporate office. For the scope of assistance, see our Working Capital service or request a consultation. Use the calculator for illustrations only.