Alternative Data and Credit: The Business Dimension

As featured in Global Association of Risk Professionals (GARP).

We have found that alternative scoring methods are particularly useful for small businesses and startups that may not have a long credit history or substantial collateral,” Maslaveckas observes.

The data for alternative business scoring and insights into cash flow and financial health can generally be obtained from banking information or business filings, he says. Candidates otherwise might “have no lending alternatives.”

“These businesses often rely on alternative data points, such as online sales metrics, to demonstrate their creditworthiness,” the Bud chief executive adds. “Showing bank statements and corresponding cash flow analytics allows lenders to confidently provide them with credit they may otherwise have trouble securing, and with better terms.”

A persistent drawback – that traditional credit scores can be up to 90 days old and therefore stale – can be overcome with alternative data and analytical tools.