Small and medium-sized enterprises (SMEs) are a vital component of the UK economy. They represent over 60% of private-sector employees and are recognised as a critical component of both innovation and economic growth. The essential problem for potential lenders to SMEs is that the investible universe of UK SMEs is enormous – involving some 5.7 million companies – and yet the credit approval process is the same for a GBP 500 000 loan as for a GBP 50 million loan.
As a consequence, to construct a diversified portfolio of loans at the smaller end of the SME market requires resources that make the provision of credit to these entities economically challenging. To do so efficiently, the investment process needs to be standardised and automated.
