New Standards of Lending: understanding SMEs to deliver fair access to finance – Equifax comments
Nic Beishon, Head of Commercial at Equifax, the consumer and business insights expert, comments on the new Standards of Lending Practice for small businesses, which come into effect tomorrow [1 July]:
“As major contributors to the ongoing success of the UK economy, SMEs will benefit from the new Standards of Lending Practice. The standards will drive good practice for lenders when assessing different types of business, protecting those borrowing money and delivering fair customer outcomes. Evaluating a borrower’s capacity to meet their ongoing repayments is increasingly important to safeguard them against over indebtedness, and to identify businesses at risk of falling into financial distress.
“The standards now apply not just to the very smallest business, but to any business with a turnover of up to £6.5 million. In order to meet their responsibilities to both clients and regulators, lenders need a 360-degree view of the applicant to understand their financial health. They should not just look at the businesses financials, but also the individuals behind the business. In particular, lenders should consider information such as the business current account turnover data and the use of overdrafts to assess whether, for example, a loan is appropriate. This should be the case no matter the size of the SME, whether the person being dealt with is a sole trader or a director of a company.
“This information is not just important at the time of application, it should also be assessed on an ongoing basis to identify any change in circumstances, and in the case of financial difficulty, the best way to assist the business owner.
“The SME sector is vital to the UK’s continued economic recovery and the Standards are designed to create fairer lending for these important businesses. Integrating a mix of commercial and consumer analysis into lending decisions will allow lenders to commit to responsible loans while helping the sector to grow.”
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Sonam Patel or Alastair Doyle
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Equifax is a global information solutions company that uses trusted unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions. The company organizes, assimilates and analyzes data on more than 820 million consumers and more than 91 million businesses worldwide, and its database includes employee data contributed from more than 7,100 employers.
Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 9,700 employees worldwide.
Some noteworthy achievements for the company include: Named to the Top 100 American Banker FinTech Forward list (2015-2016); named a Top Technology Provider on the FinTech 100 list (2004-2016); named an InformationWeek Elite 100 Winner (2014-2015); named a Top Workplace by Atlanta Journal Constitution (2013-2016); named one of Fortune’s World’s Most Admired Companies (2011-2015); named one of Forbes’ World’s 100 Most Innovative Companies (2015-2016). For more information, visit www.equifax.com.
Equifax Limited is one of the Equifax group companies based in the UK. Equifax Limited is authorised and regulated by the Financial Conduct Authority.