Making Loans Easy for Businesses

Businesses require huge amounts of money to carry out their day to day operations. Entrepreneurs put a lot at stake while starting a business. These companiesintroduce job opportunities to the economy which then becomes a part of the economic lifecycle. Loans propel such businesses and good loans with attractive interest rates allowthese businessmen to engage in healthy economic transactions. But not everyone is eligible to get good loans. Getting a loan can be intimidating. Every entrepreneur running their firm knows the nitty-gritty of a business loan.

The Indian MSME sector is growing swiftly today and adds a considerable percentage to the country’s economic growth. Despite this growth trail, MSMEs still face challenges when it comes to obtaining funds, chiefly because of costly credit options, added collateral demands, postponed decisions and lenders’ requirements for personal assurances. In addition to this, borrowing becomes difficult for small businesses as they are expected to exhibit themselves as big ventures with long-term goals, varied businesses, and strong financial compositions.

For the MSME sector to grow at a rapid pace, it is extremely important for MSMEs to have easy access to loans at affordable rates. However, owing to the size of the firm, many a time’s lending institutions are apprehensive about the viability of the loan which results in an increased turnaround time in obtaining finance. Thus, MSMEs often look for other unsecured credit options.

With an aim to bridge the gaps in the loan process, theCIBIL Rank and Company Credit Report (CCR)was introduced by TransUnion CIBIL in 2017.The CIBIL Rank is a sign of a company’s creditworthiness. A company’s CCR is summarized in the form of a number by the CIBIL Rank. It islike the CIBIL Score provided for individuals.

The CCR is a documentation of a company’s credit history, derived from data presented to CIBIL by financial institutions across the country. Most notably, CIBIL Rank highlights a company’s probability of missing payments, which is one of the major factors measured by a lender while reviewing a loan application. Usually, a company’s earlier payment behavior is a strong suggestion of its future payment pattern. This helps lenders take awell-versed decision when underwriting business loans which in turn results in a notable reduction in the turnaround time.

Not only this, many lenders offer privileged rates of interest to those businesses with a CIBIL Rank between 4 and 1. Businesses can obtainlong-standing rewards with these cheap rates of interest, which will convert into increasing cash reserves.In fact, 70% of all companies withapproved loans have a CIBIL Rank between 1 and 4.

The CIBIL Rank provides lenders with impartial insights related to the credit behavior of businesses, so that they can appraise the business entity more neutrally, proficiently and consistently. The CCR is profoundly counted on by loan providers to assess, appraise and approve loan applications.

Being an integral contributor the Indian economy, the MSME sector must always be prepared to take on new opportunities. The CCR gives MSMEsaccess to its financial health. Regularly monitoring the company’s financial health allows MSMEs to actively pitch for government tenders and be ready to effectively leverage new market opportunities. In order to maximize their potential, MSMEsmust have a clear understanding of their financial standing and work towards boosting their credit health which can be seamlessly achieved with a high CIBIL Rank.Having knowledge about your CIBIL Rank will prepare you to always be loan ready. To know your CIBIL Rank you can follow this link

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