The Surprising Reason Behind Most Business Loan Rejections

As most of us are aware, a good credit record is of utmost importance. But did you know that it is important for small businesses too? Not only should all owners of the business maintain a good credit record, but every SME too needs to have a healthy credit rating.

But first, what’s a credit rating? It is your company’s creditworthiness that has been given to your company by an authorised agency like CRISIL (formerly Credit Rating Information Services of India Limited) after you have submitted a rating request. They study the documents submitted to them and interacts with the management before giving your business a rating known as the CRISIL SME Rating. The benefits of having a CRISIL SME Rating include easier loan approval processes and giving your business credibility among others. You can go to the CRISIL website and click on SME Rating or click here to learn more.

So, how do you apply for your CRISIL SME Rating?

Most people keep delaying applying for a credit rating because they find the paperwork daunting. We’re here to break down just that and help you get your company’s credit rating.

Listed below are all the information and documents required for a CRISIL SME Rating as mentioned on the official website:

Documents Required

  • Authority letter to sign CRISIL SME Rating application
  • Documents supporting registration (memorandum and articles of associations, partnership agreements, registration documents)
  • Documents supporting name change and legal structure
  • Brief write-up on history of the company
  • Documents supporting changes in capital (if applicable).
  • Copy of income tax, sales tax, excise and wealth tax returns, if filed
  • Copy of the audited accounts for the last three years (where accounts for the last year have not been audited, provisional accounts duly certified by a Chartered Accountant, along with two years audited accounts, are to be submitted)
  • Copy of insurance policies of assets
  • Certified net worth statements of all directors/ partners/proprietor
  • In case of new project/expansion, copy of the project report containing a brief project profile, cost of project, source/means of finance
  • Details of subsidy and tax concession available, if any
  • Quality certificates, export awards won, membership of any associations, etc
  • Any other information that would enable us to understand your business better

Information Required

  • Name of the applicant unit and address:

a. Address of Registered Office

b. Address of Factory

c. Address for Communication

d. Name, Designation and details (tel. no & mobile no) of contact person

(all the above addresses must include District, State, Pin Code, Telephone No./Fax No. and email address)

  • Constitution: Proprietorship/ Partnership/ Private Limited Co./ Limited Co./ Co-op. Society.
  • Date of establishment/ incorporation
  • Industry Information

a. Industry segment

b. Sub-segment of industry

c. Products

Details of Promoters:

a. Name(s) of Proprietor/ Partners/ Directors

b. Age

c. Father/Husband’s Name

d. Share holding (percentage) in Company

e. Residential Address

f. Net worth in Rupees (lakhs) along with CA certified statement

g. Qualification

h. Nature of Experience with No of years

i. Responsibilities in Firm/ Company:

j. Responsibilities in other Businesses

(Passport size photos of all the promoters to be enclosed)

  • Details of Associate Concerns:

a. Name

b. Nature of Business

c. Sales, Net worth and Debt as on March 31 of the last FY

Details of existing borrowing / banking arrangements:

a. Name of Financial Inst./ Bank/ Lenders

b. Nature of assistance/ loan/ limit availed

c. Amount in Rupees (lakhs)

d. Self-declaration regarding conduct of the account

  • Production capacity:

a. Name of Product

b. Units

c. Installed Capacity

d. Actual Production

  • Customers’ Reference: (please list 5 top customers of your firm/ company)

a. Name of the customer

b. Percentage in total sales

c. Location

d. Name and details (tel. no./ mobile no.) of contact person of customers

  • Suppliers’ Reference: (please list 5 top suppliers of your firm/ company)

a. Name of the supplier

b. Percentage in total purchases

c. Location

d. Name and details (tel. no./ mobile no.) of contact person of suppliers

Additional Information Required:

  • Details of present orders in hand
  • Percentage of total imports and exports in the business
  • Specific information from the promoters
  • Vision of top management

a. Future plans for expansion/ diversification

b. Marketing arrangements

c. Details litigation against the company/ firm, if any

Now that you know exactly what information you need to get in place before you apply for your CRISIL SME Rating, you can go ahead and apply for your rating today. Don’t let the lack of a credit rating come in the way of a slew of benefits and the smooth functioning of your company!