Johannesburg,
24
November
2020
|
13:01
Africa/Harare

FundingHub, TransUnion Partnership Unlocks Business Credit Reports for Thousands of SMEs

South Africa’s biggest business finance marketplace, FundingHub, has signed a partnership with information and insights provider TransUnion that will give thousands of South African SMEs access to their business credit reports.

Business owners will be able to obtain their companies’ credit report as well as apply for finance through FundingHub, which uses its relationships with more than 40 different banks and finance providers to help SMEs find and compare finance offers from multiple lenders, and match them to a tailored finance solution.

Simon Purdon, the CEO of the small business finance marketplace FundingHub, said business credit reports were becoming ‘a critical tool’ for South African business owners to access loans and funding, as they provided ‘an important line of sight’ for lenders into a business.

“When it comes to lending to SMEs, the name of the game is transparency. Lenders can be wary, and giving visibility into your business is extremely important: where your money comes from, how you operate, who the directors are, and what the direction of the business is. If you can bring a business credit report to the table when looking for funding, it’s already a sign that you’re on top of your financial management,” said Purdon.

Hans Zachar, director of emerging markets at TransUnion Africa, said a business credit report was increasingly being seen as an integral part of a business’ financial management practices. SMEs looking to access funding are having to demonstrate their ability to run their businesses efficiently, on top of a good credit record, in order to persuade risk-conscious lenders to finance them.

“Until recently, business owners looking for funding would have their loan applications assessed on their personal credit reports. Today, we’re seeing a trend where financial institutions base their lending decisions on both the individual owner and business’ credit report. It’s vital that small business owners build and improve their business credit scores to be able to take advantage of any opportunity,” said Zachar. “This ultimately means that the owners need to know, validate and manage what is reflected on their business credit reports.”

The partnership will see FundingHub selling vouchers for business credit reports, with a link to the TransUnion website. SMEs can then redeem the voucher to draw their business credit report, either to validate information, or as a first step to obtaining working capital from a lender best suited to their needs.

The growing use of business credit reports is part of a move by lenders towards using ‘alternative data’ to assess loan applications. Where banks would previously look at physical collateral like a property to secure a loan, they increasingly have access to a range of data points and technology to allow them to assess risk more accurately, and make loans even where businesses don’t necessarily have the assets to back them up.

However, the rise of the business credit report as a tool does not mean individual credit records are any less important. It remains key for principal members of the business to effectively manage their own credit reports and personal finances, as that will also impact the business.

“Ultimately, checking your business credit report should not be something you do only when you are looking for a loan – it should be baked into your financial management. A business credit report shows who your business is in a document, and how on top of your finances you are,” said Zachar.

Businesses can also access their business credit reports directly through TransUnion.