SME Lending

SME (Small Medium Enterprise) is a key growth area for Financial Service providers, backed up by the RBS fund of £425m to boost capability in this sector. This creates challenges across the spectrum - for new entrants to the market, new capabilities will need to be developed to ensure robust and efficient lending decisions are made; whilst existing providers will see an increase in competition, making growth and market share retention more difficult.

We can offer a range of consultancy services in this area to support new and existing providers:

One of the key challenges with SME lending portfolios is the inability to grow effectively through manual decisioning due to the cost implications of paying a large number of skilled underwriters to make large volume low value lending decisions.

  • Scorecard build: development of acquisition scorecards and the use of ‘background’ pricing models can help provide effective and robust automated decisioning.

  • Commercial acquisition model developments: this includes director level models for smaller entities through to rating assignments for larger entities using balance sheet and cash flow data.

  • Scorecard monitoring: this is required for portfolios where automated decisions are applied.

  • Governance: commercial lending requires specific forms of governance, compared to that used within retail. The cornerstone of this is the development and the monitoring of the Risk Appetite, often based on stressed views of concentration risk. In addition, it is necessary to set up defined Delegated Approval Limits and appropriate escalation routes when individual or portfolio limits are approaching capacity.

  • IFRS 9 compliant impairment allowances development: this will involve the need to develop ongoing loss estimate models and transfer criteria definitions for the portfolio.


For further information on SME Lending, please contact our Technical Director
Chris Warhurst:


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