SMEs need to convince banks that they are taking an acceptable risk and will therefore pay a reasonable return on finance provided to them.
Basel II introduces increasingly sophisticated credit scoring tools for internal risk rating. SMEs need to revise their current approach(es) for raising access to finance in line with the new credit scoring system.
Banks using the IRB approach, will require increased levels of information and disclosure from their corporate customers including SMEs, and it is important that these customers understand why this is and how they can prepare themselves to comply with the new requirements.
