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Credit Rating: is an estimate of the credit worthiness of an individual, corporation, or a country.

It is an opinion made by credit evaluators of a borrowers potential to repay debt. Every rating grade comes with its probability of default, which in turn assists investor/lender to take informed investment decision. Rating is arrived after considering various financial, non-financial parameters, past credit history and future outlook. There are various types of ratings viz. Issuer Rating/ Obligor Rating, Bank loan Rating, Issue based Ratings, Project Rating etc. Based on type of borrower/issuer, Ratings can be classified as Individual Rating, Corporate Rating, Bank/Financial Institutions Rating, SME Rating, MFI Rating etc.

(SMALL AND MIDEUM ENTERPRISES)

SME Rating Agency of India Limited (SMERA) is a joint initiative by SIDBI (www.sidbi.com), Dun & Bradstreet Information Services India Private Limited (D&B) (www.dnb.co.in) and several leading banks in the country. SMERA is the country's first Rating agency that focuses primarily on the Indian Micro, Small and Medium Enterprise (MSME) segment. SMERA's primary objective is to provide Ratings that are comprehensive, transparent and reliable. This would facilitate greater and easier flow of credit from the banking sector to MSMEs.

SME Rating Agency of India Ltd (SMERA), has been registered under the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999. SMERA is the only rating agency for the MSME sector in India that is dedicated to increase the credit flow to the MSME sector, a press release issued here today stated. The Mumbai-based agency was incorporated in August 2005 and is promoted by SIDBI, Dun & Bradstreet and other leading banks in India. The SEBI registration makes SMERA, only the sixth rating agency in India to rate issues related to the capital market. SEBI registration has paved the way for SMERA to rate the capital market instruments such as IPOs, bonds, commercial papers, security receipts and others, the release said, adding the SEBI registration bestows higher credibility and acceptance for SMERA in the market. Its primary objective is to provide ratings that are comprehensive, transparent and reliable. This would facilitate greater and easier flow of credit from the banking sector to MSMEs.

SMERA offering:
1. SMERA Credit Ratings provides a comprehensive and independent third-party evaluation of the overall condition of the applicant. Currently, SMERA offers Obligor Ratings which takes into account the financial and non-financial factors that have bearing on the credit worthiness of the applicant. 2. At present, SMERA offers following products:
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MSME Rating Greenfield & Brownfield Grading Microfinance Institutions (MFI) Rating Green Rating Risk Management Solutions Maritime Training Institutions (MTI) Rating

3. SMERA Rating endeavors to enhance the market standing of the applicant amongst lenders, trading partners and prospective customers.

FEATURES
MSME Rating is a comprehensive and an independent third-party evaluation of the MSME. It takes into account the financial position and several qualitative parameters of the MSME that has bearing on credit worthiness of the entity. Salient Features: 1. Independent, third-party & comprehensive assessment of the overall condition to exhibit intrinsic strengths of MSME. 2. Turnover based fee structure 3. Partial Reimbursement of Rating Fee through NSIC in case of eligible MSMEs. 4. Categorizes MSMEs based on size, so as to enable fair evaluation of each MSME amongst its peers. MSME Rating is offered in two different scales i.e. "SMERA MSME Scale" & "SMERA NSIC Scale"

SMERA MSME Scale (without NSIC subsidy):


Consist of two parts viz. 1) Size Indicator and 2) Composite Appraisal Indicator RATING INDICATORS Size Indicator based on net worth (In descending order) Composite Appraisal Indicator (In descending order) Highest A : more than INR 20 crores SMERA High Above Average B : between INR 5 crores & 20 Average crores Below Average C : between INR 1 crore & 5 crores Inadequate D : less than INR 1 crore Low Lowest

NSIC - D&B - SMERA Rating Scale (with NSIC subsidy): It consists of two parts viz. 1) Financial Strength Indicator 2) Performance Capability Indicator. RATING INDICATORS FINANCIAL STRENGTH HIGH Highest Performance Capability High Moderate Weak Poor SE1A SE2A SE3A SE4A SE5A MODERATE SE1B SE2B SE3B SE4B SE5B LOW SE1C SE2C SE3C SE4C SE5C

RATING PROCESS 1. On receipt of the duly filled application form, relevant documents and the applicable rating fees SMERA will initiate the rating process. 2. As part of the rating process, a SMERA representative will contact the MSME for undertaking the site visit and seek an interview with the promoter and key personnel of the MSME unit. A questionnaire seeking information on financial and qualitative factors is also required to be filled-in by the SMERA representative with the assistance of the applicant. 3. SMERA shall complete the evaluation process within 15 working days from the date of submission of complete information.

BENEFITS
1) Wide Recognition and Acceptance
Considering that different banks deploy customized rating processes and disclosure requirements while disbursing credit, applicants find themselves investing significant time, effort and money while approaching lenders for credit. At SMERA, we have adopted a standardized, comprehensive, transparent and reliable rating process to arrive at a representative risk of a unit. Further, SMERA is supported by SIDBI and a large number of public and private sector banks in the country & such wide acceptance by the lender fraternity has made SMERA Ratings an integral part of the loan sanctioning process. The Rating process is standardized across the industry and sectors and this has enabled simplification of application process to the lenders, thus making it cost-effective for the units while applying for credit either for the first time or while enhancing their credit limit

2) Memorandum of Understanding (MOU) with Banks


SMERA has entered into MoUs with 34 Banks/Financial Institutions. Banks such as:, State Bank of India, Punjab National Bank, Syndicate Bank, Canara Bank, State Bank of Bikaner & Jaipur, Dena Bank, Corporation Bank, Union Bank of India, UCO Bank, Citi Group, Bank of India, Vijaya Bank, Allahabad Bank and Bank of Baroda and many others are working closely with SMERA to popularize third party ratings amongst their existing as well as potential MSME units in the country. Some of these banks are also extending interest rate benefits to better rated SMERA units.

3) Favorable borrowing terms


Better Ratings from SMERA has started benefiting MSME units by way of favorable borrowing terms, such as: Lower collateral requirements Reduced Interest Rates Simplified lending norms

4) Faster Access to Credit

SMERA Ratings have enabled banks/ lending institutions in reducing their turnaround time in processing credit applications from the MSME units, thus providing applicants access to timely and adequate credit.

5) Lower Rating Fees


SMERA Rating fees are economical and affordable for MSME units, with eligible SSI units enjoying rating fee subsidy up to 75% under the "Performance & Credit Rating Scheme of NSIC". In order to avail the 75% subsidy, the eligible SSI units should possess an valid SSI Registration Certificate / Entrepreneur Memorandum Number (Permanent / Provisional)& should not have availed any rating subsidy in the past from NSIC)..

6) D&B D-U-N-S Number


Units availing SMERA Ratings are assigned a unique 9 digit D&B D-U-N-SNumber. This number is an international identification number, which provides unique identity to single business entity. D&B D-U-N-S Number is used by the world's most influential standardssetting organizations and is recognized, recommended and/or required by more than 500 global, industry and trade associations for their internal requirements.

7) SMERA : An initiative of leaders


SME Rating Agency of India Limited (SMERA) is a joint initiative by Small Industries Development Bank of India (SIDBI), Dun & Bradstreet Information Services India Private Limited (D&B), and several leading banks in the country. SMERA is the country's first & only dedicated rating agency that focuses primarily on the MSME segment. SMERA's primary objective is to provide Ratings that are comprehensive, transparent and reliable. The objective of this Rating is to facilitate greater and easier flow of credit from the banking sector to MSMEs and also as a tool to facilitate self improvement.

8) Fair evaluation amongst peers


SMERA Ratings categorize MSMEs on the basis of their size, thus enabling ease of comparison of the rated unit with its peer within the industry. The size categorization enables rational comparison of companies of the same size, thus ensuring that the smaller units are not compared with larger units or companies and are put at a disadvantage while applying for credit.

9) Benefit of SMERA Ratings to Units


Enhances credibility of the unit Open doors to corporate sector having large vendor base A tool to instill good governance practices within the unit proving beneficial in the long run Aids in building trust in the international trade partners A tool for self correction and improvement Better SMERA Ratings encourage lenders to offer credit on better terms Enables getting shortlisted by customers/lenders/vendors/private equity and other financiers Approach newly incorporate SME Exchange for broad basing share holding and funding

10 )Benefits of SMERA Ratings to Banks/Lenders


Provides banks/lenders a neutral, third party and an un-biased opinion on the borrower Provides comfort to lenders Facilitates pricing of loan products on attractive terms Provides an early warning signals to banks during periodic review of accounts

SMERA's MSME rating scale consists of two parts, a composite appraisal/condition indicator and a size indicator. SMERA Rating categorizes MSMEs based on size, so as to enable fair evaluation of each MSME amongst its peers. The SMERAs MSME rating scale is specified below:

SMERA RATING MSME 1 MSME 2 MSME 3 MSME 4 MSME 5 MSME 6 MSME 7 MSME 8 Highest High

RATING APPRAISAL INDICATOR

Above Average Average Below Average Inadequate Low Lowest

GREEN RATING PROCESS


FEATURES: 1. Green Ratings will examine subject units current processes and technology and its impact on ecology i.e. air, land and water. 2. Green Rating process would focus on units processes & technology deployed from energy consumption perspective and understand various steps undertaken by the unit to become energy efficient 3. Green Rating would assess units industrial emission of air pollutants in the atmosphere due to its existing manufacturing process & technology deployed. 4. Independent assessment of disposal of industrial waste & effluents and the re-cycling treatment, if any, would be undertaken. 5. Assessment of hazardous material management from raw material to waste product stage will be studied. 6. Depending on the industry, assessment of the noise management due to units activity will be undertaken under this study. 7. Related process knowledge and documentation in place for consistent & efficient management of air/water/noise pollution at the unit level will be analyzed.

RATING PROCESS:
SMERA shall complete the evaluation exercise and disseminate the final rating within 15 business days from the receipt of all relevant/applicable information and documents

RATING SCALE:
Green Rating would be a measure of units sensitivity towards environment and the affirmative action adopted by the unit to reduce energy consumption and emissions.

GREEN SCALE

RATING DESCRIPTION

SMERA-GREEN Rating 1 Highest SMERA-GREEN Rating 2 High SMERA-GREEN Rating 3 Moderate SMERA-GREEN Rating 4 Below Average SMERA-GREEN Rating 5 Low

BOND RATING
FEATURES SMERAs Credit Rating is an opinion on the relative ability and willingness of an issuer to make timely payments of financial obligations on the rated instrument over its life. The rating is for a specific instrument. It is an opinion on the probability of default on the rated instrument in future. Thus, the rating is forward looking. Higher the rating, lower is the probability of default. SMERA offerings:-SMERA rates a wide range of debt and debt-like instruments issued by entities such as: Manufacturing companies Service companies Banks Non-banking financial companies (NBFCs) Infrastructure companies Microfinance companies Insurance companies Mutual funds Central and State Governments Urban local bodies Special purpose vehicles

Debt instruments rated by SMERA include:

Long term instruments :


Long term instruments are those that have an original maturity of more than one year, such as:
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Debt Instruments (Debentures/Bonds/Preference shares) Cash credit limit, Working capital term loans Long term loans Fixed deposits Structured debt

Short term instruments


Short term instruments are those that have an original maturity of one year or less, such as:
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Commercial papers/Certificates of deposits Letters of credit/Bank guarantees/Packing credits/Bill purchase limits Non-convertible debentures Inter corporate deposits Fixed deposits Loans Structured debt

What SMERA ratings do not measure


SMERAs rating is not a recommendation to buy/sell/hold the rated instrument, an indicator of the general performance, a predictor of the price of the issuers' bonds or equity shares, a statutory or non-statutory audit of the issuer, a commentary on the issuers promoters, directors, officers, associates, affiliates, or group companies

Rating Scale

RATING SCALE FOR LONG-TERM INSTRUMENTS SMERA AAA Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk SMERA AA Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk SMERA A Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. SMERA BBB Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk SMERA BB

Instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations Instruments with this rating are considered to have high risk of default regarding timely servicing of financial obligations Instruments with this rating are considered to have very high risk of default regarding timely servicing of financial obligations Instruments with this rating are in default or are expected to be in default soon

SMERA B

SMERA C

SMERA D

RATING SCALE FOR SHORT-TERM INSTRUMENTS SMERA A1 Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk. SMERA A2 Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligations. Such instruments carry low credit risk. SMERA A3 Instruments with this rating are considered to have moderate degree of safety regarding timely payment of financial obligations. Such instruments carry higher credit risk as compared to instruments rated in the two higher categories. SMERA A4

Instruments with this rating are considered to have minimal degree of safety regarding timely payment of financial obligations. Such instruments carry very high credit risk and are susceptible to default. Instruments with this rating are in default or expected to be in default on maturity.

SMERA D

SMERA may apply '+' (plus) or '-' (minus) signs to its ratings assigned to indicate their relative standing within the category. SMERA may differentiate a debt instrument rating by a prefix to the rating assigned.

Rating Process:-SMERA has formulated a detailed and well-defined process for ratings to
ensure objectivity, comprehensiveness, professionalism, standardization, independence and analytical rigor. Typically, the process takes about 3-4 weeks after all the information is received. Timeframe is also a function of the complexity of a given rating exercise and in exceptional circumstances faster turnaround could be considered. The stages in the rating process and few of its highlights given below are :

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Every rating is assigned based on a rating request by the issuer. SMERA does not undertake unsolicited ratings. The rating criteria are clearly and transparently spelt out and consistently applied. All ratings are assigned based on written information provided by the issuer, information obtained from sources SMERA considers reliable and very importantly interviews with the management of the issuer. It helps SMERA factor in non public information. The discussions cover critical issues identified and the future plans and strategies. All ratings are assigned by a committee consisting of experienced professionals and not by a single individual. The rating assigned is communicated to the issuer along with the rating rationale.

IPO GRADING
FEATURES OF PRODUCT

SMERAs Initial Public Offer Grading (IPO Grading)


SMERAs Initial Public Offer Grading (IPO Grading) is a tool to provide independent, unbiased and relative assessment of the fundamentals of the IPO issue. IPO Grades are assigned on a five-point point scale, where IPO Grade 5 indicates the highest grading and IPO Grade 1 indicates the lowest grading, i.e. a higher score indicates stronger fundamentals. IPO grade needs to be read together with the disclosures made in the prospectus including the risk factors as well as the price at which the shares are offered in the issue. The emphasis of the IPO Grading will help investors understand in a simple manner the risks, if any, associated with the issue, to the extent they relate to the fundamental analysis of the issuer company. The grade assigned to any individual issue represents a relative assessment of the 'fundamentals' of that issue in comparison to the universe of the other listed equity securities in India. The Grading is a one- time exercise and is done at the time of the issue

SMERA considers the following parameters for evaluation of IPO Grading: 1. 2. 3. 4. 5. 6. 7. Business fundamentals and prospects Management evaluation Corporate governance Financial risk evaluation Project related factors Compliance and litigation history

IPO Grading involves rigorous evaluation of the business prospects, industry in which the company operates and volatility in earnings, analysis of the audited financials, auditors report and notes to accounts; consistent treatment of financials play an important role. The management evaluation includes assessment of their track record, the current position role and responsibilities, and future sustainability of the issuers management. The evaluation of governance practices focuses on the board composition of the company, management practices, stakeholder relationship, transparency and adequacy of disclosure. Further, the pending & historical litigations and its impact on the fundamentals of the company are also assessed during the evaluation. Similarly, risks associated while implementing new projects such as: time over runs, cost escalation and in extreme cases even non-completion of projects during construction phase is covered while assessing financial/operational and market risks for grading IPOs.

WHAT IPO GRADING IS NOT

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An IPO grade is NOT a suggestion or recommendation as to whether one should subscribe to the IPO or not. IPO grade needs to be read together with the disclosures made in the prospectus including the risk factors as well as the price at which the shares are offered in the issue. IPO Grading is NOT a recommendation to buy sell or hold the securities graded. It is NOT a comment on the valuation or pricing of the IPO graded nor is it an indication of the likely listing price of the securities graded. IPO grading is NOT due-diligence or audit exercise or forensic exercise to detect fraud. The Grading does not have an ongoing validity. IPO Grading Process

IPO Grading Scale


The SMERA IPO grading is a five point grading scale. The issuers with strong fundamental relative to its peers are assigned highest score SMERA IPO Grade 5 and the issuers with poor fundamentals relative to its peers are assigned lowest score i.e. SMERA IPO Grade 1.

SMERA IPO GRADE

EVALUATION

SMERA IPO Grade 5 SMERA IPO Grade 4 SMERA IPO Grade 3 SMERA IPO Grade 2 SMERA IPO Grade 1

Strong fundamentals Above Average Fundamentals Average Fundamentals Below Average Fundamentals Poor Fundamentals

Greenfield and Brownfield


FEATURES

1. It is an independent, third party assessment of risk involved in viability of operations post project completion.
2. The assessment takes into account construction and project specific risk, management

risk, operational/business risk, market risk/industry risk, financial and sustainability risk.

RATING SCALE

GRADING SCALE EXPLANATION


Pr1 Pr2 Pr3 Pr4 Pr5 Pr6 Pr7 Pr8 The company has the strongest likelihood of viable operations The company has very strong likelihood of viable operations The company has strong likelihood of viable operations The company has moderately strong likelihood of viable operations The company has an average likelihood of viable operations The company has low likelihood of viable operations The company has very low likelihood of viable operations The company has poor likelihood of viable operations

Greenfield / Brownfield Grading Process

Microfinance Institutions
FEATURES
It is an independent, third party comprehensive assessment of risk involved of underlying portfolio of MFI and its resultant social impact. Besides evaluating creditworthiness of MFIs, ratings also assess trustworthiness, operational excellence, quality of loans etc of a Micro Finance Institution, amongst other subjective parameters. The assessment of MFIs also covers Financial, Operational, Management & Political risk and matters related to its internal governance, strategic positioning and social profile.

ADVANTAGES
Funding SMERA MFI Rating is an important tool for banks, financial institutions and other market participants to undertake investment or funding decisions. Data Validation- SMERA MFI Rating helps in validating data submitted to the investors / lenders.

Improve Management and Internal operations - It helps in optimizing and improving efficiency of the MFI. Better Resource / Asset Allocation - It helps in efficient allocation of resource and assets on the basis of MFI rating. Neutral Assessment - It is a third party neutral assessment of underlying risks involved in assessment of MFIs. Benchmarking - Comparing performances with other MFIs.

RATING PROCESS

The filled application with relevant documents and the total rating fee To be forwarded to the SMERA office or the sales representative. As a part of the evaluation exercise SMERA analyst will visit the MFI and Conduct the detailed discussions with the management and also undertake field visits. Post field visit and assessment of various data collected, the Rating Committee would finalize the rating. SMERA shall complete the evaluation exercise and provide Ratings to the MFI/Bank.

RATING SCALE
RATING SCALE MF1 MF2 MF3 MF4 MF5 MF6 MF7 MF8 EXPLANATION Highest High Above Average Average Below Average Inadequate Low Lowest

Rating Parameters
SMERAs Rating Parameters for MFI Credit Ratings are categorized as under: 1. Business Orientation & Outreach 2. Management 3. Operational Efficiency and Risk Management 4. Portfolio Quality 5. Financial Performance

RATING FEES A) SME RATING FEES:

CATEGORY Turnover < 50 Lacs 50 to 200 Lacs > 200 Lacs

FEES Rs. 40,000 45,000 60,000

SERVICE TAX @ 10.30% Rs. 4,120 4,635 6,180

TOTAL Rs. 44,120 49,635 66,180

B) NSIC-D&B-SMERA RATING FEES:

RATING CATEGORY FEES Turnover < 50 Lacs 50 to Lacs 200 45,000 60,000 Rs. 40,000

SERVICE SUBSIDY AMOUNT TAX @ FROM PAYABLE CONCESSIONAL 10.30% TOTAL NSIC BY SSI FEES $ Rs. 4,120 4,635 6,180 Rs. 44,120 49,635 66,180 Rs. 25,000 30,000 40,000 Rs. 19,120 19,635 26,180 Rs. 8,500 11,000 14,500

> 200 Lacs

C) GREEN FIELD AND BROWN FIELD GRADING RATING FEES:

GREENFIELD / BROWNFIELD CASES

CATEGORY Turnover < 50 Lacs 50 to 200 Lacs > 200 Lacs

FEES Rs. 40,000 45,000 60,000

SERVICE TAX @ 10.30% Rs. 4,120 4,635 6,180

TOTAL Rs. 44,120 49,635 66,180

D) MICROFINANCE INSTITUTIONS RATING FEES:

PORTFOLIO SIZE Turnover > 10 Cr between 1cr - 10 cr < 1 cr

RATING FEE Rs. 1,20,000 1,00,000 80,000

SERVICE TAX Rs. 12,360 10,300 8,240

TOTAL* Rs. 1,32,360 1,10,300 88,240

BOARD OF DIRECTORS:

BOARD OF DIRECTORS Chairman Mr. Sushil Muhnot 1 (Representing Small Industries Development Non-Executive Director Bank of India) 2 Mr. Parag Patki Executive Director Mr. L P Agarwal Non-Executive Director Mr. Vijay Chandok Non-Executive Director Chief Executive Officer

(Representing Punjab National Bank)

(Representing ICICI Bank)

Mr. S S Kohli 5 Non-Executive Independent Director 6 Mr. Rajesh Mirchandani Non-Executive Director Mr. M K Nag Non-Executive Director

Independent Director

(Representing Dun & Bradstreet Information Services India Pvt. Ltd.) (Representing State Bank of India)

Mr. S Ravi 8 Non-Executive Independent Director 9

Independent Director

Mr. Rakesh Rewari (Representing Small Industries Development Non-Executive Director Bank of India) Mr. Kaushal Sampat Non-Executive Director (Representing Dun & Bradstreet Information Services India Pvt. Ltd.)

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List of MoU Partners


With an objective to facilitate adequate, timely and low cost credit to the MSMEs, SMERA endeavours to promote credit ratings amongst all the stakeholders in the MSME sector. Hence, SMERA has tied up with the following Banks / Financial Corporations / Trade Associations / Corporates.

SR. NAME NO. 1 2 3 4 5 6 7 8 9 Allahabad Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Citicorp Finance (India) Limited Corporation Bank Dena Bank

10 ICICI Bank 11 Indian Bank 12 Indian Overseas Bank 13 Karur Vysya Bank Limited

14 Oriental Bank of Commerce 15 Punjab National Bank 16 Punjab and Sind Bank

17 State Bank of Bikaner & Jaipur 18 State Bank of India 19 State Bank of Patiala 20 Syndicate Bank 21 UCO Bank 22 Union Bank of India 23 United Bank of India 24 Vijaya Bank 25 YES Bank 26 Karnataka State Financial Corporation 27 West Bengal Financial Corporation 28 Confederation of Indian Industries (CII) 29 Erode District Small Industries Association (EEDISSIA) 30 IFCI Factors Limited 31 SBI Global Factors Limited (Formerly Global Trade Finance Ltd.)

32 The Southern India Engineering Manufacturers Association (SIEMA)

33 SME Business Services Ltd. (SMEBS) 34 The Energy and Resources Institute (TERI)

Sources of finance for SMEs:


There are a number of

Existing shareholders potential sources of finance to meet the needs of small and growing businesses: and directors funds ("owner financing") Overdraft financing Trade credit Equity finance Business angel financing Venture capital Factoring and invoice discounting Hire purchase and Merchant banks (medium to longer term loans

A key consideration in choosing the source of new business finance is to strike a balance between equity and debt to ensure the funding structure suits the business. The main differences between borrowed money (debt) and equity are that bankers request interest payments and capital repayments, and the borrowed money is usually secured on business assets or the personal assets of shareholders and/or directors. A bank also has the power to place a business into administration or bankruptcy if it defaults on debt interest or repayments or its prospects decline. In contrast, equity investors take the risk of failure like other shareholders, whilst they will benefit through participation in increasing levels of profits and on the eventual sale of their stake. However, in most circumstances venture capitalists will also require more complex investments (such as preference shares or loan stock) in additional to their equity stake. The overall objective in raising finance for a company is to avoid exposing the business to excessive high borrowings, but without unnecessarily diluting the share capital. This will ensure that the financial risk of the company is kept at an optimal level.

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