FAQs

1. What is the definition of MSME?

   The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:

   Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below:
   • A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakhs
   • A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakhs but does not exceed Rs. 5 crores;
   • A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
   Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building, and furniture, fittings and other items not directly related to the service rendered) as specified below:
   • A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakhs
   • A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crores
   • A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crores but does not exceed Rs. 5 crores.
2. What is MSME Grading?

   MSME Grading represents the agency's opinion on capitalization, recognizable assets, geographical diversity (Cluster behaviour), business life span, access to capital markets, cash intensity in transactions, credit information available, history and other internalized issues of the promoters/client to enable reasonably good credit decisions, high credit risk perceptions coupled with high borrowing cost and slow acceptance of changes through technology-based solutions. A simple numeric symbol is normally used to convey the grading.

   The main objective of this is to provide a trusted third-party opinion on the capabilities and creditworthiness of the MSEs so as to create awareness amongst them about the strengths and weaknesses of their existing operations. This is to provide them an opportunity to improve and enhance their organizational strengths and credit worthiness, so that they can access credit at cheaper rates and on easy terms.

3. What is the meaning of the term MSME Performance Grading?

   When funding/liquidity is tough and competition hard, it is B2K’ MSME Performance Grading that gives you the edge. The grading showcases the capability and financial strength of an MSME.

   This is arrived at by analysing the operating performance and financial strengths. This reflects your MSME’s creditworthiness compared with peers and improves both the credibility of your business and access to funding.

   B2K’ proprietary models in Credit Risk Grading customized for large corporates, MSMEs, Banks, financial institutions, state and local governments, help investors to understand the complexity of the investment world. B2K has developed MSME grading methodology, similar to the issuer rating model.

4. How to Apply?

   Following steps to be followed for getting a MSME Grading:

   • In order to register, click on the APPLY NOW and you will be redirected to Register Page
   • Enter your FULL NAME
   • Enter valid EMAIL ID and MOBILE NUMBER and then click on GENERATE OTP button. An OTP will be sent to the registered mobile number. Enter the OTP in the specific field. Then verify the CAPTCHA.
   • Complete the details, accept the terms and then SUBMIT, you will be redirected to the BASIC INFO form.
   • Enter all the mandatory details in BASIC INFO form, accept the terms and conditions and SUBMIT.
   • You will now be redirected to the Product/Services and pricing Page. Select the product you want to buy and click on BUY NOW – you will be redirected to the PAYMENT page to make the payment.
   • Once the payment is successfully processed you will be directed to the forms - BUSINESS DETAILS 1 and BUSINESS DETAILS 2. Fill in the mandatory details in both the forms to proceed to the UPLOAD DOCS section.
   • Upload all the mandatory documents in this section and click on FINAL SUBMIT button.
   • You will be directed to DASHBOARD that gives you details of your APPLICATION and the current status at any point of time.
5. What is the Grading Scale provided for MSME Grading?

   MSME GRADING SCALE
   Grading	Definition
   SME 1	Highest
   SME 2	High
   SME 3	Above Average
   SME 4	Average
   SME 5	Below Average
   SME 6	Inadequate
   SME 7	Poor
   SME 8	Default

6. Which aspects are considered for MSME Grading?

   The MSME Grading takes into account the following aspects:

   • MSME Grading Criteria includes five main categories: Financial Conditions, Characteristic and Perspective of the product, Operation Risk and Competitive Strength, Management Measure and Conditions of Industry of evaluated MSMEs
   • The industry in which a company operates, together with the company's competitive position within that industry, are key factors in assessing business risk.
   • High dependence on only one major production facility or market, or a limited number of customers - characteristics common to micro, small and midsize enterprises (MSMEs) - could also affect credit quality, even when this dependence underpins the company's high degree of success. B2K considers this too in their grading analysis.
   • Poor financial flexibility is usually a negative grading factor for MSMEs because of their limited capacity to withstand unexpected setbacks, and their limited access to external cash debt or equity to cover near-term vulnerabilities or temporary cash shortfalls.
   • Larger firms generally have substantially more staying power and often benefit from the extended support of key stakeholders in times of stress who provide a platform for launch of new products and continue to thrive.
   • Fast growth often is pursued at the expense of profitability, and often is subject to poor execution, even if the idea is well conceived
7. How Clients are benefited by MSME Grading?
   • Provides a trusted unbiased evaluation of your MSME's performance
   • Enables access to funding from financial institutions
   • Helps improve visibility and credibility with customers, suppliers and other stakeholders
   • Empowers as a self-improvement tool
   • With a view to facilitating credit flow to the MSME sector and enhancing the comfort-level of the lending institutions, the credit grading of MSME units done by reputed credit rating agencies and it should be encouraged. Banks are advised to consider these gradings as per availability and wherever appropriate structure their rates of interest depending on the gradings assigned to the borrowing MSME units.
8. Why choose B2K for MSME Grading?

   B2K has a large and well-equipped Analyst team to assign performance grading.

9. How does a Grading differ from an audit?

   B2K relies on a variety of information sources, including published annual reports whereas an audit focusses on accuracy and integrity of internal documents and information maintained by the client. An audit process is designed to detect fraud or misrepresentation of information, whereas the credit grading process is not.

10. How do investors benefit from a Grading?

    Grading help investors facilitate comparative assessment of investment options, complement the investors' own credit analysis, and allow asset monitoring.

11. What is the validity period of the Grading?

    Grading is assigned to a business entity and is valid for a period of one year from the date of assignment.

12. Why is Grading necessary at all?

    Grading is an opinion expressed by an independent professional organization, after making a detailed study of all relevant factors. Such an opinion will be of great assistance to investors in making investment decisions. In general, Grading is expected to bridge information asymmetry in the market. It is also a valuable input in establishing business relationships of various types

13. How Stakeholders are benefited by Grading?

    Grading provides a detailed analysis of your business to stakeholders and financial institutions.

14. Which PAN to be submitted if I am running a Partnership firm?

    Partnership Firm’s PAN has to be provided

1. What does the term Due Diligence mean?

   B2K’ Due Diligence Report introduces you, and explains your business to lenders. It is our deep dive into your micro, small and medium enterprise (MSME) that will help you meet your borrowing requirements.

   The Due Diligence Report offers a 360-degree SWOT analysis of the business in the context of a sectoral outlook – more extensive and nuanced than what a chartered accountant typically prepares.

2. How Due Diligence report is beneficial to the Clients?
   • Interpret the sustainability of the business plan and long-term viability of the unit to help you improve the business
   • Gauge your ability to run the business successfully in a dynamic environment, enabling bankers to extend credit
   • Ascertain the extent of financial obligations in relation to the entity’s cash-generation capacity, helping you and financial institutions
   • View a pictorial presentation based on quartiles data depicting the complete range of financial parameters

1. What do you mean by B2K Verified?

   B2K Verified provides a value-added quality grading service that offers micro, small and medium enterprise (MSMEs) an independent seal of authentication of its market presence.

   A seal that helps establish reliability and creates opportunity.

   We will profile your MSME by covering various aspects of its business after verifying the information you provide. As a result, your business gets B2K Verified identity in a very brief period.

   This is a unique code certifying credentials to potential customers, suppliers, and lenders from microfinance institutions to banks. And if your MSME has an online presence, the website can display the B2K Verified logo.

2. How B2K verified product is benefited?
   • Builds your credibility and positions you as a reliable business partner since your enterprise is verified by B2K, known for its unbiased gradings and verifications
   • Enhances the confidence of potential customers, suppliers, and bankers
   • Builds a better market identity and helps attract global customers
   • Increases business opportunities through online positioning
   • Reduces the risk of transaction failure by enabling buyers to make informed decisions
   • Leverages the B2K brand to differentiate your organization from peers
   • Improves perception among corporate clients
   • Enhances the ability of the company to bargain with its suppliers and customers

   NOTE: Once documents accuracy is confirmed at our end, the verification process will be initiated.