Up to 400,000 deserving small businesses could be missing out on much-needed finance due to the inability of credit providers to adequately assess and price their risk.
Dun & Bradstreet has said that up to 400,000 businesses would immediately qualify for finance with a risk profile ranging from minimal to low, out of more than one million unincorporated businesses.
CEO Gareth Jones said lenders have historically been hesitant about extending credit to small businesses as many are unincorporated entities with little or no commercial credit history.
“Previously, it has been nearly impossible to appropriately assess small business risk as small businesses are often indistinguishable from their owner – the commercial and consumer entity are the same,” he said.
“A holistic picture of small business risk can only be obtained by acquiring an understanding of an entity’s commercial and consumer profile," Jones said.
The comments came as Dun & Bradstreet launched a ‘Small Business Risk Score’ that brings together information from its database on both a commercial enterprise and its owner to enable risk assessments.
The score predicts the likelihood of a small business entering bankruptcy over a 12 month period, based on factors including business to business payments, time since the last consumer default, and the volume of credit enquiries.
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