Sageworks is offering a new service for evaluating the likelihood that a small business will default on a loan or go bankrupt.
With the Business Credit Report, Sageworks incorporates the personal financials of the business owners into its model for determining the probability of a loan default.
The model is predictive. Sageworks gathered data from a number of banks and identified key trends in businesses that have defaulted in the past. The numbers are used to predict the probability that a small business would default on its loans in the future without relying on the traditional mode of looking at payment history alone. The data is based on small businesses with less than $10 million in annual revenue.
The engine behind the business credit score provided within the report is a predictive probability of default model.
“The decision to develop the Business Credit Report was really logical for us given that it sits squarely at the intersection of our two core businesses, collecting and analyzing private company financial data and providing industry-leading credit risk management technology to financial institutions,” said Sageworks president Scott Ogle in a statement.
The number of businesses filing for bankruptcy increased from under 20,000 in 2006 to over 60,000 in 2009, Sageworks noted. Business bankruptcies have since declined slowly to a rate of 47,000 in 2011, according to the Administrative Office of the U.S. Courts and BankruptcyData.com.
The service costs $75 per report. For more information, visit www.sageworksinc.com/business-credit-report/.