Wiserfunding partners with European rating agency modefinance
European ratings agency, modefinance and London-based SME credit risk assessment platform, Wiserfunding, launch the first ever certified credit rating service for SMEs – making it Europe’s first certified credit rating for the sector.
The service means that SMEs can, for the first time, receive a specific credit rating that traditionally only larger, public corporates have been able to rely on to demonstrate their value and creditworthiness.
The new SME credit rating, launched by Wiserfunding and modefinance, will enable small firms to demonstrate their creditworthiness to potential investors and lenders, helping to secure the funding they deserve.
“All too often, SMEs form the forgotten middle between corporate and consumer credit analysis, with large international banks not extending enough credit to them because they are riskier, more correlated with each other and more difficult to assess than large corporates,” says Gabriele Sabato, co-founder and CEO of Wiserfunding.
“Yet the economic crisis and market turbulence that has characterised the last decade has verified the need for companies and financial institutions to develop adequate risk policies and faster, more reliable risk management and forecasting tools for businesses of all sizes. Our partnership with modefinance will democratise access to credit assessment methods usually reserved for large corporates, levelling the playing field for SMEs in the UK,” she adds.
Traditional lenders can use company ratings to mitigate risk in anticipation of the upcoming new Basel rules on capital requirements. Alternative lenders can demonstrate to investors they have carefully evaluated the risk profiles of assets in their portfolios.
“With this new bond rating initiative aimed at European SMEs, we are helping a sector that has suffered greatly in recent years while on the hunt for credit to support their growth,” says Valentino Pediroda, CEO of modefinance.
The new SME-specific credit rating will bring much needed transparency to SME lending, in times when financial inclusion is the focus of several regulators in Europe. By ensuring that funding is allocated to the best SMEs, credit bubbles and defaults can be reduced, ensuring stronger economies across Europe.
Wiserfunding’s and modefinance’s combined technology will provide a high quality, independent and credible risk assessment at a fraction of the cost and time required by large, international rating agencies. Existing credit ratings are only available to less than 1 million companies per country in Europe, with SMEs excluded due to lack of historical financial information and the complexities of assessing risk. The SME credit rating means that over 25 million SMEs across Europe will now have access to the same services enjoyed by publicly-listed firms.