Rishi Khosla, on CNBC: Successful lending to the ‘Missing Middle’

Given the events of the last year, supporting the Missing Middle - businesses who have the most significant impact on economic and employment growth – has never been more crucial

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  • The unprecedented nature of the pandemic means that historic correlations in commercial lending are broken and existing risk models are no longer fit-for-purpose
  • OakNorth Bank in the UK has leveraged the ON Credit Intelligence Suite to lend over £5.1B since its launch in September 2015, including over £1.1B in 2020
  • Commercial lenders take a bottoms-up, granular, forward-looking view of their loan book, splitting the economy into 262 different sub-sectors

Taking the standard commercial lending approach, where you're only looking at historic information, simply does not work in this environment

 

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  • As government fiscal stimulus is reduced, there will likely be a significant increase in business insolvencies
  • With the ON Credit Intelligence Suite, commercial lenders get a bottoms-up, granular, forward-looking view of their loan book, splitting the economy into 262 different sub-sectors
  • Lenders stress-test their entire portfolio to ensure their borrowers not only survive the stress scenario, but that they’re also not over-leveraged businesses who can't afford to service their debt coming out of it

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