Tag Archives: Small Business Lending

Risk & Compliance Improving Small Business Lending: Q&A with Ascentium


Ascentium Capital, an innovative commercial lender, wanted to expand its growing small business portfolio while keeping risk in check. I recently had the chance to speak with Chris Miller, VP of Decision Analytics at Ascentium, on how the company makes quick lending decisions for its small business customers. Please tell me a bit more about Ascentium Capital and what makes you unique? Chris: Ascentium is a commercial lender with a focus on equipment and technology leasing. We’ve grown in five years to have over $1.2 billion in assets and to be the third-largest private-independent finance company. We see ourselves as a small business lender working on making life easier for small business owners. We do that by making access to capital easier using our proprietary finance platform combined with exceptional service. Our basic premise is we can make an application decision in two hours, though it only takes about an... [Read More]

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Customer Engagement Streamlining Small Business Loans: Q&A with Harborstone

Harborstone small business cover image

Harborstone Credit Union has managed to increase its small business loan volume by 250%—with no delinquencies—since deployment two years ago. I recently had the chance to talk with Jeff Ivey, Harborstone’s Senior Vice President and Chief Sales and Service Officer, about how the credit union has used the FICO® Small Business Scoring Service℠ (or SBSS℠) solution to streamline its small business loan process, making things better and easier for both Harborstone and its members. Based in Tacoma, Washington, Harborstone Credit Union serves more than 75,000 consumer and small business accounts through its 16 branches. Q: What makes Harborstone different from other credit unions and commercial banks? Jeff: Our customer focus is our prime differentiator. We’re smaller than some competitors, we’re fully member owned, and we make sure that every member gets personal attention and feels like a part of Harborstone, not just an account number on a statement. We also... [Read More]

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Customer Engagement The Catch-22 in Small Business Credit


From China to Spain, United Arab Emirates to the United States, governments are recognizing the importance of small and medium-sized enterprises (SMEs) as an engine of employment and economic growth. The challenge that governments and financial institutions face when looking to expand SME credit is that often these loan amounts are too small for creditors to earn enough, especially if they have a costly originations process. How can they break out of this Catch-22? Creditors must make careful decisions – often with less information – or they can subject themselves to losses. FICO’s experience with SME lending around the globe gives us some insight on how to tackle this challenge. Current levels of automation vary widely, with many developed countries fully automated and others just implementing their first systems. Still, at the core, the answer for all institutions revolves around scoring, analytics and agile decisions. For those with limited automation,... [Read More]

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Risk & Compliance Clearing Up Misconceptions About Small Business Scores


Recently, the head of the Small Business Administration, Maria Contreras-Sweet, gave a speech at the Center for American Progress where she detailed the agency’s expanded use of small business credit scores in an effort to streamline the lending process, improve accuracy, ensure fairness and, most importantly, facilitate the provision of more small loans to the nation’s entrepreneurs. This brought smiles to us at FICO, however, it was clear from the resulting media coverage there’s still some confusion about what exactly is a small business credit score. In this post, I hope to shed some additional light on this topic. Perhaps the biggest misconception to clear up is that a small business credit score is not the same as a consumer’s FICO® Score. Unlike the FICO Score, which leverages information solely from the consumer credit report, small business credit scores consider multiple types of data from different sources. First is data... [Read More]

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Risk & Compliance Housing Bubble Inflating?


The latest installment of our quarterly survey of risk managers at U.S. and Canadian banks shows real concern about a possible re-inflation of the real estate bubble. In the survey, 56% of respondents directly involved in mortgage lending expressed moderate to heavy concern that “an unsustainable real estate bubble is inflating.” The actual data I’ve seen is a mixed bag. There are roughly six million homeowners in the U.S. still underwater on their mortgages. The average negative equity among those six million households is 33%. That level of negative equity won’t disappear anytime soon. However, home prices are soaring in many cities, and total homeowner equity in the U.S. is at its highest level since late 2007. I’m not sure that is a tenable situation. Given that state of affairs, I understand why many lenders in both Canada and the U.S. are concerned about the risk in residential mortgages. The... [Read More]

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Customer Engagement Join Us For FICO World 2014


Attracting, serving and protecting customers is getting tougher, so how are companies using predictive analytics to out-maneuver competitors and win customer loyalty? Join us at FICO World 2014 to discover answers from experts and network with your peers. Registration is now open for the conference, which will be held November 11-14 in San Diego, California.

FICO World has become the leading global conference on analytics-powered customer engagement strategies. This year’s theme, “The New Customer Imperative,” stems from the convergence of social, mobile and cloud, which is evolving customer behaviors and expectations, revolutionizing business and society, disrupting old business models, and creating new leaders. We’ll explore this theme through a number of sessions, speakers and events, including:

100+ presentations on analytic innovation, credit scoring, customer growth and retention, customer originations, debt management, fraud and security, mortgage lending, regulatory compliance, and small business lending.

Keynote presenters Theresa Payton,...

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Risk & Compliance Banker Survey: Delinquencies Expected to Rise


For the first time in a long time, I sense a bit of pessimism creeping into our quarterly North American risk survey results. In the latest survey of U.S. and Canadian bank risk professionals, expectations for delinquencies on credit cards and auto loans, as well as total delinquencies on all consumer loans, reached their highest levels since Q4 2011. In the survey, 44% of respondents expected delinquencies on credit cards to increase during the next six months, while 35% said delinquencies on car loans would increase. Some 43% expected the total number of delinquencies on all consumer loans to increase. These numbers certainly don’t signal any sort of imminent catastrophe. However, this is the fourth consecutive quarter in which pessimism has increased with regard to delinquencies on auto loans and credit cards. That’s starting to look like a clear trend. The glass-is-half-full crowd can interpret this trend as a healthy sign after lenders spent much of the time from 2008-2013 constricting credit availability and avoiding risk. These numbers mean more...

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Risk & Compliance Australians All Let Us Rejoice: Embracing Positive Credit Data


According to a new report from the Australian Retail Credit Association (ARCA), 62% of Australians fully support the country's newly introduced credit reporting system—which, for the first time, will consider positive credit behavior. The favorable reaction by Australians is hardly surprising. The previous negative-only reporting system often punished consumers. It meant that their credit reports were assessed based only on bankruptcy or loan defaults, even if a blemish occurred many years ago or involved a minor sum of money. The policy was very much at odds with the Australian ethic of a “fair go”—an ethic I learned about late last year when I spoke at the ARCA conference. The latest reforms change privacy legislation to give Australian lenders a more complete picture of a borrower's credit history and ability to pay. Additional information being reported will include an individual's credit account types, status, limits and up to 24 months of repayment history. This will allow lenders to make more informed decisions that reward good...

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Risk & Compliance All Systems Go for Small Business Lending


In my last post, I discussed how our latest quarterly North American risk survey indicates consumer re-leveraging is picking up. That same survey also found that small business lending appears to be on a healthy trajectory. In our survey of bank risk officers in the U.S. and Canada, 67% of respondents expect the supply of credit for small businesses to satisfy demand over the next six months. Moreover, 40% feel the approval rate for small business loans will increase, compared to just 12% who felt the rate will decrease. In terms of actual credit extended to small businesses in the next six months, 46% of bankers surveyed say the amount of new credit made available to small businesses will increase, while only 12% say the amount will decrease. These optimistic findings are consistent with the real-world data I’ve seen lately. The Thomson Reuters/PayNet Small Business Lending Index is at approximately the same level we saw in late 2007, and the index is dramatically higher than the levels we saw during the recession and throughout much of the recovery. This...