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When it comes to deciding who to lend to on rebuildingsociety.com, you’re presented with lots of information to help you make your lending decision. Prior to listing a loan on the marketplace we carry out some due diligence on the applicant businesses to ensure that a) they meet the lending criteria and b) so far as possible, to ensure the application is genuine and represents a fair credit risk for you. In this post we explain a bit more about what information we collect and what information we are able to share with you. When we review applications from businesses we collect a large amount of information about the business, their directors and their financial performance. We try and make most of this information available to you so that you have as much information as possible to make a lending decision. Some information cannot be made available on the platform as it may contain sensitive personal information about the director. When we review an application, there is some information that must always be provided for an application to be considered fully this includes:

Information requested	Made available on the site?
Filed Statutory Accounts	Yes
Management accounts or VAT returns	Yes
A SAL (statement of Assets and Liabilities) for each director and guarantor	No – Summary provided
Personal Credit report for each director	No
Recent Bank Statements	No
Details of outstanding finance arrangements	Yes

On occasion, we will request additional information from the applicant, this may include:

• Cash Flow Forecasts
• Evidence of contracts or other information alluded to in the application
• Personal Bank Statements

Why do we collect this information?

In the first instance, we collect this information to carry out our standard credit risk assessment and to ensure that as far as reasonably possible that the application is legitimate and that any claims made by the applicant are true and fair. Much of the information is also used in determining the risk rating of the loan if it goes on to be listed for your consideration. Most importantly, we collect this information for you! Information is crucial for you to be able to come to your own lending decision. With the information, we provide to you and the tools such as the discussion forum you can closely scrutinise the information, crunch the numbers yourself and understand the business you are choosing to lend to.

Using the Information Provided

Many lenders have varying lending strategies, some lenders prefer to simply spread their capital across a large number of loans without undertaking any analysis of the lending opportunities. Other lenders lend a large proportion of their investment capital to few businesses following significant scrutiny of the loan application. If you are a lender that prefers to review each application in detail before lending, here are some pointers on reviewing the applications.

1. Consider the Risk Rating

Using the information provided during the application stage, we assign an indicative risk rating to each loan application. Depending on your risk appetite, you should consider the risk rating in your lending decision.

2. Review Risk Indicators

To assist you in your due diligence of each application and to highlight some of the risks associated with a particular loan, we declare some risk indicators on each loan. For example if a businesses has previous losses or the directors have a low personal credit score, we highlight these for you, to help better inform your decision. Read more about the Risk Indicators here.

3. Look at the financials

Every loan application listed will have 2-3 financial periods listed on their profile, with the last 2 years full statutory accounts available as PDFs on the profile. Whilst historical financial performance is not necessarily an indicator of future performance, reviewing the business’s financial history might provide useful insight into the management of the company and whether the business has grown or declined. Useful information such as the level of dividends taken by the directors from the company in each financial period is provided for you to inform your assessment.

4. Consider using 3^rd party rating agencies

Whilst we use information from a number of 3^rd party credit rating agencies in our initial assessment, there is nothing preventing you from checking the ratings of the business for yourself.

Why Carry Out Your Own Assessment?

Lending to businesses involves risk. We cannot guarantee that the businesses we list on the marketplace will repay their loan. Some businesses will default on their agreement, which means that you could lose all or part of your capital. Therefore, it is important that you're comfortable with the level of risk you are taking when lending to a business, and never lend more than you are comfortable with. Understand more about the risks of lending.  Our credit risk process is constantly evolving, if there is additional information you would like to see included on the loan profiles, please let us know and we’ll look into whether we can make this available to you.

If you enjoyed this article and want to read more helpful content, visit our Lender Library.