Thincats, a UK-based lending platform, explains that their expertise in SME lending is the product of “a detailed manual underwriting process combined with market-leading data.”
Because of their sharp focus on mid-sized SMEs, ThinCats claims that they have “continually invested in making sure [they] have the best data available to inform [their] decision making.”
The firm also mentioned that their credit risk model, called PRISM, uses several different data sources including accounts filed at Companies House. PRISM models over 2 billion data points “covering every mid-sized SME that has traded since 2007 – around 200 metrics on over 750,000 businesses across 14 years.”
In October 2021, ThinCats had completed their third major upgrade to PRISM. The update has reportedly enhanced the accuracy of the model “to predict future insolvencies and includes a new filter called SPECTRUM which analyses additional real time data.” This is particularly useful given “how different sectors have been affected in different ways as a result of the Covid pandemic.”
The update further noted that these enhancements mean they can continue to “give a quick and highly accurate indication of [their] credit appetite early in the funding process despite the additional uncertainty caused by the pandemic.”
PRISM offers an extensive and instantaneous view on the financial strength of almost 450,000 mid-sized businesses. Because the model is dynamic, it allows us the firm to “track how businesses perform over time.”
They can also compare an individual business’s performance “against other similar businesses across multiple risk, borrowing and growth metrics.” The company also noted that they are supplementing this “big data” “with micro trend analysis of each of our borrowers and, in time, adding predictors of business performance.”
ThinCats added that they plan to “share the insights gained from this data analysis with [their] borrowers to help them improve their performance.” If they choose to analyze the data as a whole, rather than at an individual business level, then they can “look at the overall financial health of mid-sized SMEs and explore how different sectors or regions are performing.”
In early 2021 ThinCats analyzed the insolvency rates of businesses during 2020 and found that “despite the economic blow dealt by the pandemic, overall insolvency rates actually fell during the year, testament to the business support measures put in place by the Government and the disproportionate impact of the pandemic on sectors reliant on customer footfall such as leisure, entertainment, and consumer services.”
ThinCats further revealed that they plan to “repeat this analysis using 2021 insolvency data to see how the re-opening of the economy, the winding down of some Government support initiatives and the emergence of higher costs and other supply chain issues are impacting the financial health of mid-sized SMEs across the UK.”