CUSTOMISING LENDING PROGRAMS

Most lenders/investors are focussed on the business models of their targets. Successful business models attract lenders/investors like swarms of bees. With their success they become identifiable bankable/investible risks. In turn the financial community sets store by their attributes as key criteria for the templates for decision making.

Lending and investing portfolios are diversified by nature of risk and this is defined by the industry which is in turn defined by the business model. For example trading or manufacturing or services. The attributes of these businesses manifest themselves in metrics which define their category of risk e.g.

1. Capital

2. Turnover

3. Regional or national

4. Etailing vs retailing

5. Cash flow metrics such as Debt Service Cover ( Current Maturity Long Term Debt/Interest Expense)

6. … and so on

Past performance is normally an indicator that future performance may be similar — and this sets the precedent for benchmark levels on these metrics.

If we assume each of these metrics to be verifiable or better still brought to life actual contributors it will help make lending decisions.

Audited financials and projections make the business case come real. This coupled with interviews and assessments with promoters and their key business leads help form a judgement. Borrowers and capital seekers know how to make these meetings work well.

Instead of some of these if there were representatives who were incented to authenticate or validate these numbers it will help make the lender/investor decision that much easier.

For example debtor days outstanding is a big determinant of cash flow estimates. However these are driven by the top credit customers. If it were possible to get a reference from one of these key customers whose business was dependent on the target borrower/investee company it will help anchor the metric and its variability. Likewise for creditors who they buy inventory /raw material were to vouch for payments these will help significantly.

By fixing these anchor lenders/investors can create ensemble programs under which they can build portfolios. Dropdeck.io offers this facility with their unique model platform.

Dropdeck not only incentivises stakeholders in the investment/lending supply chain but also widens the choices for the seeker. From an investor/lender POV it diversifies their portfolios and helps gauge new types of risk by bringing in cross border opportunities. Subject to legal regulations and tax regimes this can be a very useful new source for SMEs looking to seize business opportunities and also go global.