Risk Assessment
Risk And Credit Assessment
Beehive is the largest peer to peer lending platform in the GCC, connecting established, creditworthy borrowers with both retail & institutional investors. The platform applies the innovative technology of crowdfunding to eliminate the cost and complexity of conventional finance whilst offering borrowers fast access to low cost finance.
SME submit loan application
Beehive performs risk assessment
Physical address is verified
Approved application listed
Beehive places large emphasis on only listing established & creditworthy SMEs on the platform. To be considered for finance, the borrower must meet certain criteria such as length of business, sector, revenue threshold, and level of debt.
Each funding proposal undergoes an extensive internal credit & risk assessment by Beehive’s proprietary credit decision engine that is supported by robust external verification. To initiate the process, all the relevant financial documentation is collected and then analysed to collate hundreds of data points which are used as part of the final credit report.
Using a proprietary credit scoring database, the data points automatically produce a score that is proportionally weighted to reflect the value of the inputs. This results in a Beehive suggested risk rating being applied to each funding proposal.
Beehive then uses a variety of Application Programming Interfacing (API) integration & customer information to monitor the financials of the borrower over the course of their facility with Beehive. This is to ensure that Beehive keeps up-to-date snapshots of the borrower’s performance throughout the duration of the facility.
Since launching in 2014, Beehive has lent over AED 1.5 billion to over 1,000 SMEs across the GCC. The default rate and NPLs have remained low and currently stands at 1.98% since inception. As a result of this, investors have been able to achieve a Net Yield of avg. 10-11% per annum.
| Year | TF Net Yield | WF Net Yield |
|---|---|---|
| 2014-2019 | 8.00% | 10.90% |
| 2020 | 9.74% | 11.35% |
| 2021 | 9.77% | 10.92% |
| 2022 | 10.54% | 10.85% |
| 2023 | 12.29% | 10.74% |
Credit Assessment
The Beehive Credit Team risk assesses each funding proposal based on the borrower’s ability and willingness to repay. Data points are analysed, verified and finally scored with an overall risk weighting. The data points can be summarised into the following three categories:
- Repayment Strength
- Owner Commitment
- The Analysis of External Reports
With a team of experts demonstrating over 10 years of regional credit experience, the financial analysis performed by Beehive goes into more detail than the average Financial Institution in the region and is done to ensure that default rates remain low.
Repayment Strength
This is where the Beehive Credit Team will analyse the financial performance of the SME over the previous 24-36 months in order to assess the borrower’s ability to repay the requested capital. Financial strength can be analysed in multiple ways, but Beehive focusses on the following areas:
- Changes in Profitability
- Changes in Revenue
- Liquidity Ratio Performance
- Working Capital Management
- Changes in Debt Position
- Changes in Equity
- Cash Cover in Bank Statements
- Repayment History with Beehive & Other Financial Institutions
- Supplier Repayment Analysis
Owner Commitment
Due to the transient nature of the UAE, Beehive places a large emphasis on the background of all SME owners (>5% shareholding). This is done to gauge the commitment of the respective owners to both the UAE and the company itself. To do this the Beehive Credit Team evaluates the following:
- Do shareholders have family based in the UAE?
- Do shareholders have children in school in the UAE?
- Do shareholders own property in the UAE?
- How much debt do shareholders have in the UAE and how much has been paid off?
- How much equity have shareholders invested into the business since conception?
- To what extent are shareholders withdrawing funds from the business?
- What are the shareholders current credit bureau scores?
External Reports
To supplement the internal risk analysis, Beehive uses a variety of established private & public third parties that specialised in the analysis of SMEs across the UAE. These include:
- Dun & Bradstreet – Market Leading Providers in Business Information Reporting.
- Al Etihad Credit Bureau (AECB) – Federal Credit Bureau in the UAE.
- ABC Criminal – Criminal Check Services in the UAE.
- Thomson Reuters World Check – Market Leading Screening Reports.
(To pull information from the AECB & Thomson Reuters databases, Beehive uses Robotic Process Automation, which significantly helps to reduce application time and the occurrence of human error.)
As part of the Beehive Risk Assessment, a mandatory site visit report is completed by a member of the Beehive Credit Team. During the visit, business specific questions will be asked, the working site will be observed, and the management will be interviewed.
Supported by a Corporate / Parental Guarantee.
Repayment Strength: Excellent
Owner Commitment: Excellent
Analysis of External Reports: Excellent
No Corporate / Parental Guarantee.
Repayment Strength: Excellent
Owner Commitment: Excellent
Analysis of External Reports: Excellent
Repayment Strength: Very Strong
Owner Commitment: Very Strong
Analysis of External Reports: Very Strong
Repayment Strength: Strong
Owner Commitment: Very Strong
Analysis of External Reports: Strong
Repayment Strength: Strong
Owner Commitment: Strong
Analysis of External Reports: Moderate
Repayment Strength: Moderate
Owner Commitment: Strong
Analysis of External Reports: Moderate
Repayment Strength: Moderate
Owner Commitment: Moderate
Analysis of External Reports: Low
