Reducing Risk in Small Business Lending: A Configured Approach

Eighty-two percent of businesses that fail do so because of cash flow problems.1  This stat presents both a challenge and an opportunity for the commercial lending industry.  How can Commercial banks and lenders make smarter lending decisions and optimize profitability?  While access to small business credit and payment data is important, it is really just the beginning.

Configurability is a tool that allows lenders to quickly and effectively address specific small business needs by choosing the precise pieces needed to reach an educated decision. Simply put, creating a unique combination of data, scores, analytical approaches and strategies will help lenders make smarter decisions and maximize performance across their commercial portfolio.

Configured models help lenders know more about small businesses to score more applicants and, ultimately, approve more loans and grow their business. Lenders choose the best strategy for their needs, and then tailor it to each situation.

Configured models built upon the Equifax Commercial Financial Network (CFN), can provide lenders the insights and flexibility needed to properly adjust their market positioning and strategies to help make stronger decisions and optimize performance across their portfolio.

Equifax has the data and insights lenders need to fuel these models, including:

  • Configurable Data Sources
  • NeuroDecisionTM Technology
  • Trended Data and Attributes

Essentially, with increased configurability, lenders get the performance and flexibility of a custom score without the lead time to develop it. In fact, one customer had a 50% lift in predictiveness of risk when evaluating their commercial card lending with configured models versus traditional models.

Equifax created 2 thought leadership deliverables to better  illustrate  the Equifax configured approach.

1http://www.nsba.biz/wp-content/uploads/2012/07/Access-to-Capital-Survey.pdf

US Bank Study, 2015