How we credit check businesses looking to get on the GRID
We have been receiving lots of questions about the credit process that we use at GRID Finance so we’re going to show you how much we do to get comfortable with every single application that goes live on the platform. We do a huge amount as you can see if you keep reading!
Anti-Money Laundering
Before we complete the credit review we complete our due diligence to ensure that the borrower is legitimate and that the business exists.
Financial Review
When a potential borrower submits an application to us, we gather as much information as possible and we review each business’s financial strength and ability to repay the loan. The ability to repay the loan is primarily based on cash flow. Our focus is to assess a business’s ability to repay the loan which is a function of a variety of factors. We have developed our own proprietary credit model for assessing businesses’ suitability for accessing the GRID to raise finance.
Financial documents
As part of our financial review we look at everything that a borrower can provide us. An example of what we look at are as follows;
Last six months of bank statements
Latest management accounts
Audited accounts
Irish Credit Bureau Reports
Credit Reference agency reports
Proof of future orders
Project budgets explaining how the funds will be used.
How the funds will add value to the business and generate a return on investment
We look at everything we can but if we have questions we call and discuss the project with the borrower.
Social Review
We also look at the businesses Facebook, LinkedIn and Twitter accounts along with their website to get a sense of the business and how it is performing day to day. We review how active the business is on these platforms and also how the business interacts with their customers.
Ratings
Limited companies all get a credit core with credit rating agencies once they have filed their first set of financial statements with the Companies Registration Office (“CRO”). We get the credit score from Vision-Net for limited companies and we have classified them into certain categories.
We also know that there are thousands of fantastic businesses in Ireland that don’t have a credit score and that this is no reason not to allow them to access the platform. They typically don’t have a credit score because they are not a limited company, have not filed their first accounts yet or are a sole trader.
The full rigours of our financial and social review apply to these businesses so that we are as confident as possible that the business is able to repay their loan. We can’t give them a credit rating because they do not have a Vision Net score so these businesses are classed as Small Businesses (“SB”). If they have gained access to the platform we think that they are fantastic businesses.
At the end of the credit review process, suitable projects are published on the GRID Finance platform with the relevant credit rating assigned.
Our Credit Team
Any decision to allow a business access to the GRID is not made by any one team member. All applications are reviewed by at least three people (our project review team) and for a project to go live, at least two people must be comfortable with the application. Thankfully all of our businesses are currently repaying on time and we have zero defaults to date.
So far each loan has been unanimously supported by everyone on our credit team.
John O’Callaghan leads our credit decisioning process. John has 25 years of banking experience across a variety of banking institutions. The other members of the credit team are qualified chartered accountants with experience working in large accountancy firms. A member of the sales and marketing team also attends our bi-weekly project review meetings to share any additional background information relevant for the meeting. They do not however have a vote at the project review meeting.
And that’s it. We put a lot of effort into checking every business that goes live on the platform but if there is anything more that you would like to know please get in touch. In the meantime, if you’re not already lending to some of the great businesses already on our platform, then sign up here.
Sean O’Riordan
Chief Operating Officer
