P2P platform ThinCats streamlines SME loan grading
The new system will give investors two alternative means of judging a loan to a small business.
The new system will give investors two alternative means of judging a loan to a small business.
UK peer-to-peer (P2P) lender ThinCats is introducing a two-tiered grading system for all loans on the platform’s primary market. The new system will allow investors to quickly determine two key factors that determine the quality of a loan: credit quality and security quality.
Credit quality, the ability of a company to service its loan obligations, will be represented by a one-to-five-star grading. Security quality, the value of the underlying assets relative to the size of loan, will be represented by a one-to-five-padlock grading. Alongside the existing loan information pack, which provides an in-depth overview of each loan, the new grading system will give quick-to-reference additional guidance to help investors decide whether to lend to a company and the interest rate they would like to receive.
ThinCats – so named because it is the opposite of “fat cats” – was formed in 2010 and has lent almost £200m to UK small and medium enterprises (SMEs) over six years. Its parent company is ESF Capital, whose head of credit analytics, Rolf Hickmann, was instrumental in developing the star grading.