New models in SME finance: Best practice from Spotcap

Bruce Brenkus - Chief Risk Officer at Spotcap

Interview with Bruce Brenkus, Chief Risk Officer at Spotcap.

How is that possible that Spotcap offers online loans for SMEs with decision making within 24 hours and banks can’t do this?

The application process is very fast. The application can be filled out online in as little as five minutes. Depending on how much information a client makes available the credit line may be granted in a few hours. Most approved customers will have their credit line available within 24 hours.

We evaluate an applicant’s real-life business and cash flow data and not just his backward-looking credit score. Spotcap utilizes many digital data sources including the business bank account access, online accounting software systems, and other digital data streams to utilize in our algorithms and core underwriting platform to make sound decisions within a short amount of time.

What are targeted customers for your loans?

Spotcap lends to micro, small and medium-sized businesses. We serve different industries particularly retail, service, wholesale, and manufacturing industry types. We have minimum standards for our applicant base with each country including minimum annual sales amounts, time in business, business license / registration standards, online bank account access, and access to key financial documents.

How do you manage delinquencies inloan portfolio?

Our default rates are well within expectations. We manage our default rate through our proprietary risk technology. We utilize several analytic models in providing our credit decision as well as models for credit line size determination and our risk-based pricing methodology. Combined these tools along with our credit operations team provide us with sufficient risk coverage. We continually analyse the portfolio and vintage pools to enhance our models, segmentation strategies, and overall rules engine environment to provide the best decisions possible.

What are the basic criteria for loan delivery when analyzing customer?

When applying for a loan from traditional financial institutions, small businesses are typically asked to provide a large amount of financial history and supporting documents, as well as evidence for a large asset base. However, many small businesses in need of financing have been in operation for only a few years, so do not meet typical bank conditions, despite having healthy business operations. Spotcap uses a variety of data sources to ensure creditworthiness: We assess all of our clients’ bank account data, as well as their business’ financial statements (both on annual and quarterly basis), VAT declarations, and profit and loss statements (retrieved via accounting provider software integration) thus measuring realtime business performance rather than relying solely on credit history which may be of minimal information.

Why is Spotcap granting loans in Spain, Netherlands, and Australia Why did you start from these countries and do you plan to expand?

We’re currently operating in Australia, Spain, and the Netherlands. We aim to become a global leader in short-term online business lending. We have expansion plans for additional countries in the near term future. Our goal is to build the most efficient user interface, underwriting platform, and statistical models to ensure sound and timely decisions cost effective results, and intense risk mitigation standards. As we get closer, we will make the announcements on any further expansion plans.


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