SME Rating

SME Ratings

Importance of SMEs

SME's support an equitable growth of any economy and are significant contributors to employment generation. However, one of the main problems faced by SMEs is access to finance (Supplement to the Budget Speech 2015-16 of the Government of Mauritius).

In recognition of the importance of the SME sector, the government had announced set up of an SME Bank 'to provide seed capital to entrepreneurs without any need for personal guarantee'. An amount of MUR 10 bn would be made available to the SME Bank over the next 5 years. The government has also announced the set up of a 'One-Stop-Shop which will provide under one roof, all the support, financing and information, as well as the delivery of all the permits and licenses that SMEs require to start and grow their businesses'. Several other key incentives have been announced for the development of the SME sector and highlight the importance of the sector to the economy. In addition there exist certain schemes / requirements that encourage commercial banks to lend to SMEs.

SME Ratings

SME ratings of CARE Ratings (Africa) Private Limited (CRAF) provide an independent opinion on the creditworthiness of an SME. SME ratings compare the SME with other SME's therefore ensuring a fair assessment of the company.

SME ratings can help both the SME's and the lending institutions in several ways:

  • Advantages to the SME:
    • Better access to credit as SMEs
    • Approach various lenders using a single report
    • Lower borrowing costs for good SMEs
    • Detailed appraisal of business by independent entity
    • Detailed report that can be shared with various stakeholders (lenders, business counterparties, equity holders) and can be used as a benchmarking tool for performance
  • Advantages to the lending institutions
    • SME ratings can be used by lenders as a tool while providing loans / credit to the SMEs.
    • Standardized ratings
    • Risk mitigation
    • Rating rationale provides detailed analysis on the company
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