Help me understand cash credit loan account!

I am availing a cash credit loan from sbi under pm mudra scheme. I cannot understand a few things regarding this loan account.

1. The bank asked me to do all the transactions from this account, even the ones i am receiving so that the interest is low.

But if ever i need some money for my personal expense, earlier i used to withdraw from my current account but now is this possible with this kind of account?

2. Say i got 1000 sanctioned limit from bank, i used 500, and later in the day i received 300, so from 500....300 will be deducted and the interest charged will be on 200 only, ami i right?

3. For some reason, if i am unable to pay this 200 at the end of the month, then what will happen next month?

Please help me understand this account as i am completely new to this kinda thing.