Many Indian MSMEs face a strange situation: your company is legally registered, your turnover crosses ₹50 lakh, your ITR is up to date—yet your business loan application gets rejected. Why?
The answer often lies in your CIBIL MSME Rank (CMR), a hidden factor most business owners don’t even check before applying.
In 2025, banks and NBFCs don’t just care about documents. They rely on digital credit reports like the Company Credit Report (CCR) to judge how risky your business is. And if your CMR Rank is poor, your profile is automatically rejected—even if your financials look strong on paper.
Let’s explore how CMR Rank impacts loan approvals, and why even well-performing companies get denied funding.
What Is CMR Rank?
CMR stands for CIBIL MSME Rank, a credit rating assigned to businesses by TransUnion CIBIL. It ranges from 1 to 10:
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CMR-1 to CMR-4: Low risk (loan likely to be approved)
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CMR-5 to CMR-6: Moderate risk
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CMR-7 to CMR-10: High risk (loan mostly rejected)
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CMR-NA/NH: No credit history available
Banks check this rank before processing any MSME loan, OD, CC limit, or machinery loan. Even if you are profitable, a CMR-7 or higher will put you in the high-risk zone and lead to rejection.
Why a Good Turnover Doesn’t Guarantee Loan Approval
Many MSME owners believe that having ₹1 crore+ turnover automatically qualifies them for a loan. But modern lenders analyze repayment behavior, not just revenue.
Here’s why turnover alone isn’t enough:
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A business may have high income but poor cash management
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Missed EMIs, bounced cheques, or high credit usage are red flags
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CMR Rank captures repayment discipline over 24 months
According to Investopedia, lenders value past repayment behavior more than projections or profit statements.
Common Reasons Your Loan Gets Rejected (Despite Good Financials)
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High CMR Rank (7 to 10): Most rejections happen due to bad credit behavior reflected in your CCR.
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Overdue Accounts: Even a small overdue of ₹500 can trigger automatic rejection.
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Multiple Credit Inquiries: If you apply to 5 lenders at once, your CMR Rank drops further.
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Settled or Written-Off Loans: Past defaults—even if resolved—lower trust.
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High Credit Utilization: Using 90% of your CC or OD limits regularly impacts CMR badly.
All these entries are clearly visible in your Company Credit Report, which lenders access directly from CIBIL or CRIF.
What Lenders Actually See in Your Company Credit Report
Banks don’t just glance at one figure. Here’s what they analyze:
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DPD (Days Past Due): Any EMI delay in the last 6–12 months
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Loan Type & Status: Active, closed, settled, or written off
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Utilization Ratio: Percentage of OD/CC usage
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Inquiry Count: Number of recent loan applications
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Overdues: Total unpaid amount across all accounts
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CMR Rank: Overall credit risk level from 1–10
If even one of these parameters is negative, the loan is marked as “high risk” and rejected.
Example: Rejection Despite High Turnover
Business Profile:
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Pvt Ltd company registered since 2019
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₹80 lakh annual turnover (GST and ITR filed)
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No collateral offered
CCR Report:
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CMR Rank: 7
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Overdue ₹2,350 from a CC account (25 days)
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Two EMI payments delayed by 30+ DPD in last year
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Five inquiries in last 2 months
Result:
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Rejected by 4 major banks
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Approved by an NBFC at 20% interest with 100% collateral demand
This is a classic case where documents looked perfect, but CMR Rank told a different story.
How to Fix the Problem: Improve Your CMR Rank
You can’t fix turnover instantly—but you can improve your CMR Rank. Here’s how:
1. Pay All Overdues Immediately: Even ₹1 unpaid shows as a red flag.
2. Avoid New Loan Inquiries for 60–90 Days: Let your score recover.
3. Lower Your OD/CC Usage Below 50%: Request a limit enhancement if needed.
4. Dispute Incorrect Entries: Raise errors via CIBIL Dispute Resolution.
5. Close or Regularize Settled Accounts: Settled loans pull down your rank unless cleared.
6. Add Positive Credit Activity: Take a small secured loan and repay on time.
Within 60–90 days, these actions can move your CMR from CMR-7 to CMR-4 or better, making you eligible for business funding.
Who Uses CMR Rank?
CMR Rank is used by most major Indian banks and NBFCs, including:
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State Bank of India (SBI)
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HDFC Bank
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ICICI Bank
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Axis Bank
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IDFC First
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Kotak Mahindra Bank
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Lending platforms like Indifi, LendingKart, NeoGrowth, and more
They access your CCR from bureaus like:
FAQs: Loan Rejection and CMR Rank
What CMR Rank is required to qualify for a loan?
CMR-1 to CMR-4 is considered ideal for any business loan, especially unsecured credit.
Does company registration help with loan approval?
Yes, but only if combined with a clean credit profile and CMR Rank.
Can a good CIBIL Score replace CMR Rank?
No. CIBIL Score is for individuals; CMR Rank is for business entities.
Why is my CMR Rank NA?
Your business may not have any credit history or active loans in the last 24 months.
Can CreditCares help improve my CMR Rank?
Yes, we offer full CCR reviews, dispute filing, rank correction guidance, and loan readiness support.
