Line of Credit

Get easy loan. Once approved, use as per your need and
pay only for what you use

Line of Credit or overdraft facility is best suited for frequent cash inflow. Businesses typically need money to avail cash discounts by paying upfront or on time, extend credit to customers, pay off vendors or meet seasonal demands. Unsecured Line of Credit Loans from Indifi are the best solutions for these needs.

Upto 50 Lacs

Get loan upto 50 Lacs
depending upon the need

1.5% Per Month

Get amazingly low interest rate starting from 1.5% per month

One Approval

One time approval for usage upto 12 months

Always Balanced

Pay for as much as you use

2% Fees

We only charge 2% processing fee

How To Avail Overdraft Facility

MSMEs that meet the following criteria are eligible for ‘Line of Credit’

Eligibility For Overdraft Facility

  • Minimum operational history of 2 years
  • Promoter age >24 years
  • 2 years ITR for >10 lacs
  • VAT returns for the last 12 months

Required Documents For Overdraft Facility

  • Business Registration Proof
  • KYC documents of the applicant and the organisation
  • Bank statement for the last 9 months
  • Pan Card of the promoter
  • Aadhaar Card of the promoter

What Is An Overdraft Facility:

The term ‘Overdraft Facility’ refers to a tool through which you can withdraw money from your current or savings account despite zero balance in your bank account. Every bank & non – banking financial company offers this amazing facility to its customers. Overdraft facility is a kind of short term loan which is to be repaid by the customers within the assigned time frame.

In accordance with the financial institution’s terms and conditions, creditors may collect interest rates that the debtor is required to pay back. The interest rates offered by creditors are fixed and not fluctuating.

How To Apply For Overdraft Facility

  • Taking extra money from the financial institutions (using the overdraft facility) is similar to taking a loan from the bank. In order to avail of the overdraft facility, some clients have to take approval by the creditor.

  • The overdraft facility is robotically turned on when permitted clients take out additional money from their bank account and the balance in their account becomes negative. However, the clients who take authorization from the creditors have to submit a request for it. They can submit it online on the official website as well.

  • An Overdraft Facility in which security is mortgaged is contemplated to be secured overdraft. In contrast, an overdraft facility that is taken in opposition to a bank account is contemplated to be an unsecured overdraft facility.

  • When you borrow a business loan from your bank, you will get the amount sent straight to your account. Similarly, when your account is authorized from the bank for the same then you’ll be given an applied overdraft amount or overdraft loan.

  • In case, you require money immediately and you are already permitted for the overdraft facility then when you will be able to withdraw money from your account. “It will go directly in your bank account. Still, you can only withdraw money up to the approved line of credit.”

  • You have to pay interest to your bank from the time you have received an approved overdraft amount. The amount of interest may vary depending on the security you’ve mortgaged to your bank such as your house, fixed deposits, insurance policies, and so on.

  • As the debtor’s ledger can change on a daily basis so the amount you have borrowed requires to be estimated on a regular basis. The debtor can pay back the overdraft amount without giving prior information to the bank.

Overdraft Types

  • Overdrafts Against Salary
  • In order to avail an od facility, you are required to have a salary account in the bank from where you borrow overdraft amount as financial institutions provide overdraft against salary as well.

  • Overdrafts Against Equity Shares
  • Yes, you heard it right! As equity shares are not considered as an alternative for security, it is probable to get an overdraft facility through your equity shares. The value of equity shares constantly changes from time to time and it is also contingent on the market and that’s why the percentage approved for overdraft against equity shares as security is of a small amount.

  • Overdrafts Against House
  • The bank evaluates and conducts an inspection of your property before giving approval for an overdraft against the house as security. Usually, the authorized overdraft amount is around 30 to 40% of your property value. Bank will also review your capability to repay the amount and your income sources to ensure that you can repay the overdraft amount before approving the overdraft against the house as security.

  • Overdrafts Against Insurance Policies
  • The approved amount for od facility will depend upon the current worth of insurance policy if you give your insurance policy as a security. For instance, whatever your current worth of insurance policy is, you will get the same overdraft amount in your account.

  • Overdrafts Against Fixed Deposit
  • Usually, overdraft against FD is convenient for both borrower and creditor as the borrower’s Fixed Deposit account is with the creditor and hence, the creditor knows about the borrower’s financial status. The borrower will get benefit if he/she keeps FD as a security because the interest rate paid by the borrower is less. “The borrower is eligible for getting a maximum overdraft amount of approximately 75%, if the borrower gains an overdraft amount against Fixed Deposit.”

So, these are some kinds of Overdrafts that you can avail from your bank!

Overdrafts Facility Characteristics

  • Overdraft amount is offered for an approved limit and this can be diverse for each debtor.

  • Interest Rate is estimated on a regular basis and is charged on the overdraft amount used by the debtor.

  • There are no prepaying fees you have to pay to the bank. If you want to pay back the overdraft amount before the time limit then you can pay it altogether.

  • It has no minimum repayment on a monthly basis but the amount you use must not exceed the line of credit and also do not delay your repayment of overdraft amount otherwise it will have an effect on your credit history.

  • It offers flexibility of repayment. You can pay back whenever you want to!

So, anyone can avail it on the basis of secured or unsecured overdrafts. The debtor can be self-employed, individual person, SMEs who take small business lines of credit loan, individuals who are employed, etc. However, if it is Salary overdraft then the debtor cannot use it for professional work and it can be used by salaried individuals.

FAQ Related to Line of Credit

    Line of Credit is a loan product that is designed by banks to meet any immediate need for money by companies. This is a corporate product in which the company is assigned a credit limit by the bank. Here are some of the FAQs related to Line of Credit:

  • Which are the domains of business which are offered a line of credit?
  • The line of credit is specifically designed for businesses that lie in the category of businesses, manufacturing units, traders, retailers, service providers, etc. These can also include businesses in the travel and hospitality services, and the ones in the e-commerce space. However, a line of credit is not for retail customers.

  • How is a line of credit different from a loan?
  • Line of credit is an extension of an overdraft (OD) facility wherein the bank assigns a limit under which the borrower can withdraw. While a loan is granted one-time based on the borrower’s profile, it is a non-revolving credit facility, unlike a line of credit. Also, a loan has a fixed amortisation schedule with a fixed or floating interest rate.

  • What are some of the differences between an overdraft facility and a line of credit facility?
  • Line of credit facility has a pre-sanctioned limit, beyond which a corporate borrower cannot go. This is unlike an overdraft facility, wherein the borrower is allowed to withdraw funds over and above his account balance. In a nutshell, a line of credit is a subset of an overdraft facility.

  • Is a letter of credit and line of credit the same?
  • Letter of credit (LC) is a product in trade finance wherein the bank or the financial institution gives a guarantee to the seller’s bank in that trade. This guarantee means that if the buyer fails to pay the seller, then the LC issuing bank will make the complete payment. However, the line of credit is a funds withdrawing facility, in which the borrower can withdraw money within the pre-agreed sanctioned limit.

  • How the repayment of the line of credit works? Can a borrower repay it anytime he wants?
  • As a corporate borrower who has used the line of credit facility, now is the time for repayment. It is ideally advised by money managers and financial advisors to repay the amount withdrawn as soon as possible and don’t delay it unless necessary. This is because the interest charged will be lesser when you repay it early, thereby decreasing the total interest outgo.

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