Credit assessment

The Funding Souq credit team assesses each funding proposal based on the borrower’s ability and willingness to repay. We have implemented a credit assessment process that evaluates the creditworthiness of borrowers using a credit scorecard. This scorecard considers various parameters and assigns a score to each borrower, which determines the associated risk band.
Financial Capacity
Our Credit Team carefully analyzes the financial performance of SME borrowers, considering various factors to evaluate their financial capacity. We thoroughly assess the borrower’s ability to generate revenue, effectively manage cash flow, and fulfill their financial obligations. Our analysis encompasses several key areas of focus, including:
  1. Income Generation.
  2. Cash flow Assessment.
  3. Profitability and Ratio Matrix.
  4. Liquidity Ratio Evaluation.
  5. Working Capital Management.
  6. Debt Repayment Capacity.
  7. Capital Structure.
  8. Cash Cover in Bank Statements.
Credit History and Risk
Assessing the credit history and risk profile of SME borrowers is essential to determine their reliability and creditworthiness. The Funding Souq Credit Team carefully examines the following areas to gain insights into the borrower's past credit behavior and assess associated risks:
  1. Review how well the borrower has repaid loans to Funding Souq and other financial institutions.
  2. Outstanding Debt and Facility Utilization.
  3. Considering credit factors specific to the borrower's industry that may impact their creditworthiness.
Owner Character and Commitment
Assessing the background of all SME owners (>5% shareholding) is crucial in understanding their level of dedication and responsibility towards the business. The Funding Souq Credit Team evaluates the following points related to owner character and commitment:
  1. Do shareholders have family based in the UAE?
  2. Do shareholders have children in school in the UAE?
  3. Do shareholders own property in the UAE?
  4. How much debt do shareholders have in the UAE? and how much has been paid off?
  5. How much equity have shareholders invested in the business since conception?
  6. To what extent are shareholders withdrawing funds from the business?
  7. What are the shareholder’s current credit bureau scores?
External Sources
Funding Souq conducts additional layers of due diligence to ensure the prospects are not advertised outside the platform nor are they seeking funding on other platforms. Also, the firm uses a variety of established private and public third parties to further supplement the internal risk analysis. These include:
  1. Sanction list screening softwares
  2. Credit Bureaus
As an integral part of the Funding Souq Risk Assessment process, a mandatory site visit report created that allows for a comprehensive evaluation of the business operations. During the visit business specific questions are asked, the working site is observed, and the management is interviewed.
Our Credit Team carefully analyzes the financial performance of SME borrowers, considering various factors to evaluate their financial capacity. We thoroughly assess the borrower’s ability to generate revenue, effectively manage cash flow, and fulfill their financial obligations. Our analysis encompasses several key areas of focus, including:
  1. Income Generation.
  2. Cash flow Assessment.
  3. Profitability and Ratio Matrix.
  4. Liquidity Ratio Evaluation.
  5. Working Capital Management.
  6. Debt Repayment Capacity.
  7. Capital Structure.
  8. Cash Cover in Bank Statements.
Assessing the credit history and risk profile of SME borrowers is essential to determine their reliability and creditworthiness. The Funding Souq Credit Team carefully examines the following areas to gain insights into the borrower's past credit behavior and assess associated risks:
  1. Review how well the borrower has repaid loans to Funding Souq and other financial institutions.
  2. Outstanding Debt and Facility Utilization.
  3. Considering credit factors specific to the borrower's industry that may impact their creditworthiness.
Assessing the background of all SME owners (>5% shareholding) is crucial in understanding their level of dedication and responsibility towards the business. The Funding Souq Credit Team evaluates the following points related to owner character and commitment:
  1. Do shareholders have family based in the UAE?
  2. Do shareholders have children in school in the UAE?
  3. Do shareholders own property in the UAE?
  4. How much debt do shareholders have in the UAE? and how much has been paid off?
  5. How much equity have shareholders invested in the business since conception?
  6. To what extent are shareholders withdrawing funds from the business?
  7. What are the shareholder’s current credit bureau scores?
Funding Souq conducts additional layers of due diligence to ensure the prospects are not advertised outside the platform nor are they seeking funding on other platforms. Also, the firm uses a variety of established private and public third parties to further supplement the internal risk analysis. These include:
  1. Sanction list screening softwares
  2. Credit Bureaus
As an integral part of the Funding Souq Risk Assessment process, a mandatory site visit report created that allows for a comprehensive evaluation of the business operations. During the visit business specific questions are asked, the working site is observed, and the management is interviewed.
Credit Risk Classification
Based on a scoring system, each borrower is assigned a risk band that signifies their creditworthiness and associated level of risk. At Funding Souq, we utilize a professional risk band categorization consisting of A+, A and B. The risk bands are determined by evaluating various factors, including the borrower's financial capacity, credit history, risk profile, owner character and commitment, and Analysis of external sources.
A+
A
B
Financial Capacity
Outstanding
Very Good
Good
Credit History and Risk
Outstanding
Very Good
Good
Owner Character and Commitment
Outstanding
Very Good
Good
Analysis of External Reports
Outstanding
Very Good
Good
A+ indicates a guaranteed investment where the borrower has either pledged collateral, or there is a guarantee scheme attached to the facility, which limits or eliminates the possibility of capital loss.

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