Modern methods of assessing creditworthiness of borrowers – small and medium business entities

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The subject of this research is the methods of assessing creditworthiness of borrowers of small and medium business, which allow assessing the level of risk for the bank. The author examines the dynamics of lending to small and medium businesses over the last decade in the Russian Federation, and analyzes the level of bad debt in the small and medium business loans credit portfolio. Critical analysis is conducted on the modern Russian and foreign methods of assessing creditworthiness of borrowers belonging to small and medium business, as well as highlights their merits and flaws. The author concludes on the fact of absence of a universal efficient method of assessing creditworthiness of small and medium business in Russian practice, overlapping of most of the indicators in the examined approaches, accent on qualitative indexes of the assessment of creditworthiness, and presence of subjective factor in the methodologies. The scientific novelty consists in substantiation of the list of absolute and relative indicators with consideration of existing research on this topic, in order to form express assessment of the creditworthiness of small and medium business, the integral indicator of which can be gained on the bases of taxonomic analysis. Improvements to the methodology of assessing creditworthiness of small and medium business can jump start development of lending to entities of small and medium entrepreneurship.