If you have been turned away by banks for being unworthy of credit, you are not the only one. In the absence of sufficient collateral security, most banks are wary of lending to small businesses. However a credit rating agency can help you tide over this problem to quite an extent. All you have to do is to approach a credit rating agency and get your business rated in terms of your financial credibility and strength. Chances are that banks and financial institutions may take you more seriously than before.
What Does A Rating Agency Do?
Being credit worthy means having the ability to repay your loan in time. So what rating agencies do is that they assess your company’s credit worthiness and give you a rating which is widely accepted by banks and other financial institutions. According to Crisil SME Head, Yogesh Dixit, “Credit ratings serve as an identity for these companies and help in increasing banks and financial institution’s confidence in their credit worthiness and building better relationships.” Mr Bajalia, Executive Director, IDBI Bank says, “Credit Agencies have played a vital role as we welcome independent and reliable credit assessment. As credit agencies have done due diligence, therefore it lessens our work and fastens the entire loan granting process”.
Top agencies like Crisil conduct an analysis on two dimensions- performance capability and financial strength along with their 360 degree analysis scheme which has four parameters- Management Competence, Industry Check, Financial Report and Business Strength (includes product and marketing plans). These agencies act as a reliable link between the enterprise and its funder (banks or financial institutions). India’s best rating agencies include CRISIL, Dun & Bradstreet, FITCH, ICRA, ONICRA and SME Rating Agency of India Ltd (SMERA).
Benefits of Getting Rated:
How Much Does It Cost You
The rating fee charged by the agency depends upon your company’s turnover. Being heavily subsidized by the government, upto 75%, the cost of rating has come down substantially. You may have to shell out Rs 25,000 to Rs. 40, 000 depending on your turnover.