How we do credit assessment at Fundkiss
18 Dec 2020
Ever wondered how a project is ‘scored’ on Fundkiss? What is the rationale behind the credit rating assigned to a certain venture (A, B or C) with each rating corresponding to a certain interest rate which in turn ranges from 10 to 15%?
Through this blog, we would like to take you behind the scenes into how we conduct credit assessment at Fundkiss – from the first level check done by the Sales Team, to the final decision taken by our Credit Committee.
It may be noted that this end-to-end process can take a maximum of a month to a minimum of a week, depending on how soon you provide the supporting documents. You may rest assured though that we accompany you at every step of the credit assessment and ensure that you are aware of the documentation requirements throughout.
SCREENING BY THE SALES TEAM
The information exchange and sales process between the borrower and Fundkiss are managed by our Sales team until the project is put online. First, the team analyses the project to see if it meets the primary eligibility criteria (of being incorporated and registered in Mauritius as well as operating for a minimum number of years – such as two years for SMEs and three for sole traders), and makes sure that we have all the relevant documents for the credit analysis.
In terms of how the process works on the ground, once you register on our website, our Sales team will contact you within 24 hours to understand your funding requirements and give you a list of documents that we will need to carry out your credit analysis.
Our Sales team then sends the documents to the Credit team who will study the company and the project in greater depth for a second level check. The role of the Credit team is fundamental as it ensures that the business is sustainable and has sufficient reimbursement capacity in order to publish its project on our platform.
ASSESSMENT BY THE CREDIT TEAM
At Fundkiss, we partner with an external credit assessment firm, Strategic Insight, which possesses in-depth expertise across the credit and market intelligence research domains.
The Credit team placed at our disposal is made up of 3 analysts, 2 credit managers and 3 business support staff, and turns around each proposal in a maximum of 3 days, provided all information is held at their end.
At the outset, it is important to note that we strongly believe that the SME sector deserves a customised approach, which is why we work with Strategic Insight to benchmark our borrowers against the Best SME. This allows the Credit team to arrive at a borrower credit score that is truly reflective of the SME’s performance vis-à-vis its real peer set. The credit assessment also relies on qualitative factors to the extent of 45% of the rating, even as quantitative, or financial, factors do make up the bulk of it, at 55%.
Finally, the Credit team believes in conducting site visits to truly understand what is happening behind the scenes and also to get a feel of how the business is really doing, rather than simply going by the paperwork and documentation submitted by the borrower. The philosophy followed by the team is simple yet effective – ‘the closer you are to the risk, the better you can assess the risk’ – with their proactive attitude uniquely suiting them to work with SMEs where a more hands-on approach is required.
REVIEW BY THE HEAD OF CREDIT RISK
As a culmination of their due diligence process, the Credit team prepares the proposal within the three days allotted for seeking documents, obtaining all information from the borrower, and placing it within a robust framework for a thorough review by our Head of Credit Risk at Fundkiss.
All this is done by following a proprietary risk model, where the Credit team looks at a wide variety of factors such as financial risk, business risk, management risk, security risk, relationship risk, qualitative risk, country risk and sector risk, before arriving at the final credit score which takes into account more than 50 parameters. Significantly, the model has been tweaked since the outbreak of the pandemic of Mauritius to be more responsive to borrower challenges and muted economic environment in a post-COVID context.
At this stage, the Head of Credit Risk asks questions, and, once satisfied, adds his comments to the proposal as well as reviews the rating and quantum of loan before the onward progression of the proposal to the Credit Committee.
DELIBERATED UPON BY THE CREDIT COMMITTEE
The Credit Committee is made up of 5 members with in-depth experience in the credit, banking and finance domains. These experienced and senior members have 48 hours at their disposal to review the credit paper and arrive at their decision.
If a majority of the members of the Credit Committee approve the proposal, we proceed to make a financial offer to the client and the project is listed on our platform following the client’s acceptance of the terms of contract.
HOW IT ALL ADDS UP
Ultimately, we strive to ensure a fast, transparent and simple process at Fundkiss such that each borrower receives a credit decision within an average of 15 days.
By following this smart and simple credit assessment process, Fundkiss has been financing Mauritian companies for a variety of projects with amounts ranging from MUR 50,000 to MUR 3 million over 3 months to 5 years since our inception in 2018.
We are proud to celebrate the milestone of 100 projects financed with MUR 52 million raised for financing needs ranging from capex to working capital to supply chain finance, as we bring this blog to you. Ready to be the next borrower?