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This new credit scoring tool will come in handy for Australian SMEs seeking finance


SME Credit Score recently launched a first of its kind credit scoring tool for Australian SMEs. The new platform aims to make it easier for SMEs to access the finance they need at the best possible rate by educating them on their business credit score and connecting them with the most appropriate lender. It is free to use for SMEs seeking finance.

Co-founders James Watson and Jonathan Raymond believe better access to finance will support SMEs to invest in innovation and compete both on a local and global scale.

James highlighted that small businesses cite lack of access to funds as the number one barrier to innovation, remarking that this is no surprise given 44 per cent of small business loan applications are rejected.

“Also, with business lending remaining flat over the past year, it is a growing concern that SME lending is declining. In the face of this, we want to provide Australian businesses with valuable insight into their credit worthiness and give them the confidence to apply for the right loans,” he said.

“We found a major impediment to SMEs being able to access the right finance at the right rate is borrowers’ lack of knowledge about their business credit score. This can lead them to apply for loans which are unsuitable for their business and credit rating. As a consequence, some borrowers may have their applications declined by three or four lenders before securing finance.”

SME Credit Score co-founders James Watson and Jonathan Raymond
SME Credit Score co-founders James Watson and Jonathan Raymond

What exactly does SME Credit Score do?

SME Credit Score reduces this risk for SMEs. Those seeking finance can visit the site where they will meet a handful of simple questions which take less than two minutes to answer, following which the business score is revealed. They are then matched with an appropriate lender based on their score and finance requirements.

The underlying credit scores are sourced from Veda while the lenders are selected from a growing panel of more than 60 lenders, including Prospa, Scottish Pacific, and a range of other bank and non-bank lenders.

SMEs could go directly to Veda, however, there is a charge associated with this. “Our service is designed to be an educational tool for Australian SMEs and is free for those looking for a business loan. However, we don’t just provide a business credit score. An important part of our service is matching borrowers with lenders,” the team pointed out.

However, the site doesn’t guarantee a successful loan, the loan application is made directly with the lender and will be approved or rejected by the lender. SME Credit Score simply provides the SME and the lender with valuable information about your credit score upfront so both can determine if a loan application is likely to be successful.

What is the vision behind SME Credit Score?

James and Jonathan, who also co-founded and self-funded SME business loan brokerage Merchant Cash, have witnessed the challenges SMEs face in securing credit and wanted to make the funding process easier.

“We encountered a large number of SMEs seeking credit through Merchant Cash who were unaware of their business credit score. Many borrowers do not even know such a score exists and even fewer realise the damage they can do to it by applying for unsuitable loans,” Jonathan revealed.

“Without knowledge of their credit score, some SMEs may have unrealistic expectations about the amount or rate of credit they can access. They may waste considerable time making unsuccessful applications and damage their business credit score in the process. So lenders or products that may have been available to them at the start of their search are no longer a possibility due to their lowered credit score.”

The new technology-driven platform offers a simple and fast alternative for SMEs who otherwise may spend weeks researching and applying for different credit options. It’s envisaged that the proprietary algorithm will also help increase the number of successful SME loan applications with borrowers going to the right lender first.

 “There are two million SMEs in Australia, employing almost 70 per cent of the workforce. The sector plays a vital role in the economy and we believe this platform will considerably increase how effectively and efficiently SMEs can access finance in the future to help innovate and grow their businesses,” said Jonathan.