Do SMEs (small and medium enterprises) need rating?
Why? SME rating is a relatively new concept, even globally. CRISIL has launched its SME Ratings in India in 2005 and has assigned over 1000 ratings till date. Credit rating helps improve access to funding for SMEs, and may also result in savings in interest cost for well-run SMEs. Besides this obvious benefit, other attendant benefits of a rating for SMEs include the following: Credit rating provides an independent third-party opinion on the strengths and weaknesses of the SME, which the management could use to improve their performance. A credit rating exercise instils several best practices that are adopted by large corporates (such as financial discipline, quality of Management Information System, assessing future financial performance and planning for the same, timely repayment of all debt obligations, etc.). Credibility with business partners — customers, suppliers, etc. Improved visibility. Are there companies that don’t need rating? Companies that do not have borrowing programme
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