Borrowing amongst UK SMEs

As of 24 May, the Bounce Back Loan Scheme (BBLS) lent £18.5bn to 608,069 small businesses as, up from £14.2bn by 17 May. In contrast, CBILS, which lends up to £5m, only lent £8.15bn since its launch in March¹. As any businesses run out of working capital and exhaust any internal funding that the owners inject, they will turn to you to cover their short to medium term funding needs.

There is already a raft of applications for the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) . But this surge doesn’t mean its manageable. Lending processes have been disrupted by the need to incorporate new credit assessment metrics and frontline staff have been severely impacted by dislocation.

Therefore, in this blog we explore how you can be better equipped to manage – at speed and scale – the cascading requests for support from businesses nationally.

Challenges in increased demand

The spike in applications has put immense pressure on the existing onboarding processes of the over 60 accredited lenders involved in the scheme. In addition, there’s a need to assess whether a CBILS applicant has “a borrowing proposal which the lender would consider viable, were it not for the current pandemic”². It’s not hard to see why there has been a perceived delay in processing applications at the speed and scale required. Especially as many of you are dealing with branch closures, reduced staff capacity and only partly digital application processes.

Faster methods to onboard and evaluate these SMEs will be crucial for everybody.

Use digital onboarding to manage the speed and scale of applications

Lenders have been realising the benefits of digitising their onboarding processes for a long time – this isn’t new, and the current crisis has evidenced just how important it is in processing applications at the speed and scale required to meet the increased demand.

Digital onboarding improves speed, enhances the customer experience and reduces the percentage of applications that are unlikely to make it through. Such factors are evermore critical as we face a pace of change and need, like never before.

But, updating the customer journey is not always a quick fix. And therefore if the customer journey can’t be changed in the short term, there are other quick wins that could benefit. Experian can help you smooth the onboarding process and access the data you need to better manage spikes in applications and quickly remove any that are unlikely to be successful. Here are four ways in which we can help, immediately:

Accessing alternative data sources:

The Experian Commercial Acumen Data Sharing Portal enables applicants give you access to alternative data such as Open Banking data and management account data. It combines it with existing credit history data that Experian holds alongside commercial credit score and adverse financials. This gives you deep insight into what your customers can afford and the products that will suit them, so you can make fast and fair lending decisions. Find out more.

Understand the data better:

Our industry-renowned, transaction categorisation engine; Trusso, automatically interprets the data from bank accounts. It classifies it into predefined categories of income and expenditure, making it easier for you to interpret and understand what behaviours and patterns are present in a firms’ transactions. It helps you pick up subtle patterns and signals in behaviours, giving you the insight you need to make better and more informed affordability calculations. Find out more.

Instant access to credit data:

BusinessIQ is a longstanding product used by many leading firms. It draws on Experian’s business, director, consumer and payment history data to give you a clear view of your customer’s business. Through using it you will have instant access to credit reports, and you can add modules to customise the platform. These include:

  • Alerts, so you’re notified of key changes in the business;
  • Portfolio, to analyse and evaluate risk levels across all your accounts;
  • Decisioning, to set and manage your own credit policies;
  • Authenticate, to identify and validate the key people within the business.

Find out more.

Automated decisions :

PowerCurve Customer Acquisition is our flagship decisioning capability that enables you to make automated lending decisions 24/7. It takes your applicant’s information and enhances it with credit, fraud and internal data, mixed with predictive scoring and policy rules to trigger instant decisions. It improves the speed of applications and reduces applicant drop-out. You can also move decisioning to the front of the application process, weeding out applications unlikely to be successful and making the volume of remaining applications more manageable. Find out more.

Supporting you in the transition to a digitised commercial lending approach

A fully tuned digital journey has minimal manual referrals and minimal applicant drop-out. It contains data calls in a logical and efficient order, that encourage rather than discourage, the applicant and allows end to end applications to run as close to real-time as possible.

Experian can help support you in your move to a digitised commercial lending approach. Helping from the start to end – for example upfront data capture management makes sure you are capturing the right, up to date and accurate information in a way that is as frictionless as possible. Our API services can be integrated in to both new and existing journeys to enable the capture and validation of this data.

We can also support you in assessing new commercial applications. For any new applicant, you need to be looking at affordability and eligibility criteria to ensure that the business applicant can afford the re-payments.

We have the biggest breadth of data on the market, which can be used to create the most complete view of businesses in the UK, helping assist you in making these assessments, quickly and accurately.

Our PowerCurve Customer Acquisition decisioning tool, along with our suite of detailed, granular level fraud solutions, allow you to perform all checks digitally as part of the upstream process, saving you time before applications reach your underwriters.

Our commitment as your partner

Working with you as a trusted partner, we can help you to accelerate the whole application and decisioning process, making it easier for the small or medium business to engage with you as the lender, and enabling you to streamline your processes. By reducing the time and effort required to manage this process through digitisation, you can improve your customer journey, efficiencies and ultimately reduce cost.

Our team of consultants can support you in this transition to further digitise your commercial lending, by mapping out your existing process and providing the right solutions for your business. To see how our experts can help to transform your commercial lending process contact us now.


¹ https://www.iab.org.uk/

² https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/

Phoenixing

Identify a business returning back to the same supplier as a new customer by linking new businesses to their forebears to stop ‘phoenixing’ – where businesses start to trade under a new legal entity to abandon their old debts.

Business Authentication

Run an applicant business against a series of data sets to give a graded level of certainty that the business is legitimate, trading and has been trading for certain period-of-time. Behind the business, key people also need to be authenticated, verify these people exist, live at the address provided and have a credit footprint. This service is also built-in to Experian Commercial Acumen.