What is a Clean Overdraft?
A Clean Overdraft is a working capital facility extended largely on the strength of a business's banking relationship, cash flow and credit profile, with minimal or no dependence on physical stock/debtor security. It gives businesses flexible access to funds for short-term needs without going through the process of hypothecating inventory or receivables, making it a faster and simpler alternative to a conventional cash credit limit.
This facility is particularly useful for businesses with strong banking discipline that need quick, flexible access to funds for operational needs, without pledging physical assets.
How a Clean Overdraft Benefits Your Business
- Quick access to funds without extensive collateral documentation
- Flexibility to withdraw and repay as per business cash flow
- Interest charged only on the utilized amount
- Useful for bridging short-term cash flow mismatches
- Ideal for businesses with a strong banking track record
Basic Eligibility for Clean Overdraft
- Minimum 2–3 years of business operations
- Strong and consistent banking relationship with regular credits
- Good credit score (generally 700+)
- Stable turnover and profitability trend
- No major defaults or overdue history
Loan Details
| Parameter | Details |
|---|---|
| Rate of Interest | 12% to 18% per annum |
| Professional Segment | 10% to 14% per annum |
| Minimum & Maximum Loan Amount | ₹2 lakhs to ₹5 crores |
| Minimum Business Vintage | Minimum 2 years |
| Age Limit | Min 23 years – Max 65 years |
Documents Generally Required
- KYC of business and promoters
- Bank statements (last 12 months)
- Last 2 years' financial statements / ITR
- Business registration proof