Objectives and Key Deliverables
Project BackgroundArts Alliance is a venture capital firm with a history of both investing in and building companies. We are currently in pre-launch development of an SME lending platform, called Growth Street. Growth Street aims to provide revolving credit facilities to prime SMEs in the UK, funded by P2P lending. Please see the attached document for further background details on Arts Alliance and on the Growth Street proposition.Arts Alliance has been investing in and lending to SMEs for over 15 years, however our experience is limited to high growth, technology enabled companies. Therefore before committing to a seed investment of Growth Street, we would first like to strengthen our understanding of current SME lending practices by speaking to experienced practitioners and advisers.
ObjectiveOur objective for this project is to spend a day in a question and answer style discussion with an experienced consultant with a background in SME lending. Our goal is specifically to understand the risk management processes banks use on portfolios of SME loans. This session will cover questions around: the current best practice for establishing an underwriting process based on SME credit scorecards (the common approach in consumer lending), the limitations of a scorecard approach, the current best approaches for incorporating expert information (eg through a Bayesian approach), a discussion of available third party systems for risk management, and high level overview of implementation times and cost.The overall goal is to help assess and critique our current ideas, advise on sources of data or analysis, and stimulate our thinking in areas we haven’t considered.