Peer-to-Peer loan platform ThinCats has launched what it describes as a ‘revolutionary’ new form of SME loan grading.
ThinCats says that the system allows investors to easily assess the ‘credit quality’ and ‘security quality’ of peer to peer loans to SMEs. It has been devised by Rolf Hickman, currently Head of Credit Analytics at ESF Capital (ThinCats’ parent company), and former founder and CEO of the pH Group (part of Experian).
Companies will now be graded via a one-to-five star rating, which shows its credit quality – its ability to service its loan obligations. A further one-to-five grading, represented by a padlock, will provide an indication of the security quality – the value of the underlying assets relative to the size of loan.
Chief Executive of ThinCats John Mould (pictured) said: “As peer to peer rapidly becomes a mainstream investment proposition, it’s even more vital that investors are armed to make sound decisions about the credit-worthiness of the businesses they choose to lend to. We’ve invested heavily in this part of the business, and will continue to introduce developments that improve service, and make peer to peer lending a reliable and rewarding mainstay for investors.”
“Investor demand is driving the market toward even greater transparency and ease of use for the end user, and this grading system is an important piece of that puzzle. I’m confident that our method is among the most robust and reliable approaches to doing so.
Head of Credit Analytics at ESF Capital Rolf Hickmann said: “The star grading system developed for SME loans combines proven credit analytics with overlays of factors which our analysis has shown have a significant impact on insolvency rates. We believe that the resulting grading is the most accurate predictor available of an SME’s ability to service its debt across the cycle.”