THINCATS has said that initial analysis of secured business loans taken out in the UK last year has helped to validate its predictive data model.
The peer-to-peer business lender launched Prism Prospect last year, which assesses how likely UK businesses are to need financing and segments them into five categories.
The model uses market and company financial data, combined with proprietary non-financial statistics, to provide a credit grade. The model also provides a security grade, by assessing the firm’s balance sheet assets and future cashflows.
Read more: ThinCats lent record £112m in 2018
This identifies the likelihood of a business to need external funding over the next 12 months, with categories ranging from ‘very likely’ to ‘unlikely’.
Over the past few weeks, ThinCats has analysed secured debt facilities taken out by small- and medium-sized businesses in 2018 to see how the data reconciles with its predictions.
“The initial analysis is very encouraging and goes some way to validate our propensity model,” ThinCats said in a blog post on its website.
“20 per cent of companies we suggested would be more likely to borrow took out new secured debt in 2018.”
Analysis from the P2P lender showed that businesses in its ‘very likely’ band took out 221 per cent more secured debt than average last year.
ThinCats noted that its analysis does not include unsecured debt, which accounts for around half of all business loans. This information will become available when companies file their 2018 accounts and could boosts the percentages further, ThinCats said.