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Have you ever realized that start-ups or established companies aren't just the dreams and ambitions of business entrepreneurs and owners? These are their brainchild, their entire life's investments, and its success is the benchmark against which they measure their own achievements. With their eye on the prize, most business owners spend long hours poring over operational costs, employee benefits, infrastructural investments, adaptive technology and multi-tasking, among others, just so that their business ventures are a success. As they draw up these details, they need advice from their business partners, financial advisors, and experts in the field.

Their financial advisors and chartered accountants (CAs) play an integral role in helping business owners understand their financial and credit options and boosting their financial knowledge. Additionally, they can also introduce them to the latest schemes and government plans for their consideration and ensure they are compliant with regulatory requirements so that they are credit-conscious and loan-ready when the opportunity arises.

Four credit-related challenges faced by businesses and how you, their Chartered Accountant, can help

When it comes to credit, businesses are often plagued with confusion over credit myths and opting for credit from the formal lending landscape. As their financial advisors, the onus lies with their CA to help them understand their credit options, separate myth from fact and opt for a safe and repayable credit line. Here are 4 key credit-related issues faced by businesses, and how you, their CAs, can help them resolve the same:

• How to fast track their access to credit

Getting timely access to credit when they need it the most is a common issue faced by many businesses. The most important thing to do when creating a roadmap and budgeting for expenses is to have a realistic approach about the numbers, costs and timelines. If your client is looking to apply for a credit facility, start preparing for it in advance.

Work with your client on their short-term and long-term credit and business goals. Keep their company documentation (tax returns, creditors' statements, financial statements for previous years, CIBIL Rank and Company Credit Report, etc.) ready for assessment, as well as any other documents that can facilitate a faster approval process. Having all this ready will help fast track your clients' business credit requirement.

• The decision to avail credit from the formal or informal lending systems

While the formal lending landscape has evolved in recent years, many businesses still refrain from approaching a bank or lender. Instead, they prefer to reach out to the informal set up which may include local lenders demanding loan collateral.

Here's where you need to step in. The RBI and Indian Government have been championing the cause of the MSME business owners, and consequently many banks offer business loans at competitive rates of interest, making it faster and much more cost-effective for MSMEs to opt for the same. You may need to sit with your client and pore over their credit plans jointly and explore these options.

• Inadequate information about Government schemes

The Indian government has noticed and appreciated the contribution made by the MSME sector towards India's GDP. In line with this, it has ushered in a variety of schemes for MSME business owners, such as collateral-free loans and a 12-month moratorium announced in May 2020, in wake of the COVID-19 pandemic. The highly-acclaimed AtmaNirbharBharat Schemes aims to ease the challenges faced by the sector.

As your client's trusted financial advisor, it is important for you to stay connected to updates on these schemes and advise your clients accordingly on how this can prove to benefit and be cost-effective for them.

• The importance of monitoring credit health

While most consumers have heard about a CIBIL Score, they often get confused between the Score and the Rank. Just as a CIBIL Score is a reflection of an individual's credit profile, a business' Company Credit Report (CCR) and CIBIL Rank is a reflection of their credit profile. And a business with a CIBIL Rank between 4 and 1 is a positive sign of a credit-healthy company that is less likely to default on a credit/loan commitment. Not only does the Rank highlight a company's past credit behavior but also plays a critical role in determining the business' access to credit in the future. In fact, the CIBIL Rank is a sign of your client's business financial stability and credit profile; and can help them get loans at competitive rates of interest or even help them win over project bids.

This is why it is very important to monitor your client's CIBIL Rank and Company Credit Report on a regular basis, so that you'll can take an informed credit decision when the opportunity arises, and can leverage a high CIBIL Rank to avail of competitive rates of interest, too.


Go the extra mile and help your clients help their businesses, armed with credit information, credit-consciousness and awareness of their entitlements. This can go a long way in establishing the foundation of a collaborative and robust relationship.


To know about CIBIL Rank & Company Credit Report, click here


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