Bank Loan rating

 

Bank Loan Rating

Bank loan rating from external agencies are used by Banks, Vendors, Financial Institutions, Investors and others to gauge the financial health of an Enterprise and its ability to make timely payment of its bank loan, including principal and interest payment. Various external credit rating agencies like CRISIL, ICRA, CARE, Brickworks and others have been authorised by the Government to rate the bank loan facilities enjoyed by businesses in India. Further, to improve awareness about credit rating and its benefit, the Government of India also provides a subsidy for MSME businesses to obtain SME credit rating.

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Different Types of Bank Loan Facilities


Working Capital

Working capital loan is sanctioned by Banks for working capital purposes like holding of inventory, receivables and build-up of other current assets in a business. Working capital facilities are renewable every year.

Letter of Credit

A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller, in the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.