New AI offers lifeline to startups refused bank loans
Alternative lender Just Cash Flow PLC has begun harnessing augmented intelligence (AI) to identify promising startups through their online footprint – including social – and approach them directly.
Start-ups are usually caught in the catch-22 situation of being unable to access financial support, because lenders traditionally request two or more years of accounts to indicate healthy trading. However, the odds are stacked against such businesses if they can’t access the funding they need to invest and grow.
In fact, it’s estimated that more than half of SMEs in the UK have been denied bank loans in their early days. This lack of fiscal support has driven two-thirds (60%) of small businesses to dip into their own pockets, with many using savings or even re-mortgaging their homes.
Just Cashflow’s AI will turn this situation on its head, with promising companies proactively approached with an offer of financial support.
In practice the AI assesses around 16,000 new companies that register with Companies House each week. Thousands of data points are analysed including directors’ online footprint, incorporating company websites and social media platforms such as LinkedIn. This produces a ‘Propensity Index’ that shows the businesses that have the greatest potential to be successful in the future. Highly skilled business underwriters then review this shortlist, with the most promising companies approached.
For example, a new business consultancy focusing on the energy sector wouldn’t usually be able to attract immediate financial support. But because Just Cashflow’s new system looks over associated online materials, it would find that the lead director once held an extremely senior position with a major oil company and is incredibly well connected.
This would then significantly increase the propensity for this new business to be successful in the eyes of the AI. While obvious upon explanation, 16,000 weekly registrations would prove impossible to wade through manually.
Just Cashflow executive chairman John Davies, explains: “This type of new business and thousands like them are simply invisible to traditional lenders. And if the owners go looking for financial support, they’re almost certain to get a ‘computer says no’ response.
“The innovative use of AI enables us to turn startup business lending on its head by finding these businesses that would otherwise be rejected but are viable lending partners. It would be impossible to do this without harnessing new technology even if you employed hundreds of additional staff.
“AI does the heavy-lifting to find the right targets, and our highly experienced underwriters make the ultimate lending decisions.”
The initial support that Just Cashflow is offering includes a £25,000 line of credit (that works the same as a traditional bank overdraft) alongside a range of free anti-fraud tools to assess customers or suppliers – and access to other services as required, such as foreign exchange for companies trading outside of the UK.