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risk assessment process

At Beehive, we only allow established creditworthy businesses onto our platform and our experienced credit assessment team undertake robust and rigorous risk checks on all businesses that apply for listing on the platform in addition to obtaining all necessary legal documentation as part of our assessment.

 

Each business undergoes an internal risk assessment supported by robust third party on site verification. Only successful businesses will be listed on the Beehive marketplace.

 

Each finance request is given its own rating based on a multiple number of data points which contribute towards an overall risk band. We look at both quantitative and qualitative measurements, including revenue growth, profitability, strength of management team and sector competitiveness. We have our own proprietary risk model which is supported by an internationally recognized, external party who carries out our field verification visits. The metrics which are provided on the platform are a summary of the multiple data points we review during our risk assessment process.

 

Risk ratings are determined based on how the company scores on the hundreds of data points that make up our 6 risk criteria:

 

Risk Chart
Company: Assessment, review and risk scoring of the company’s management team, their relevant sector expertise and performance to date, coupled with the strength of the company’s infrastructure, the desirability of its products and services, and relationship with it’s key customers and suppliers.

 

Financial Strength: Assessment, audit and risk scoring of the company’s financial strength, including repayment coverage, revenue growth and net profit performance, scored against key financial repayment ratios.

 

Payment History: Companies’ payment history as scored by using bank statements and third party agencies, taking into account evidence of unpaid cheques for insufficient funds, the number defaults and late payments on monthly loan repayments, and any police cases filed for non payment. The timeline and amounts of when these payment irregularities occurred are also taken into account.

 

Commitment: Evaluates the business owner’s commitment to their company including initial share capital, and subsequent personal monies injected, levels and type of current external debt commitments, impact to the company in respect of related party commitments and any potential flight risk exposure.

 

Industry: Assessment and benchmarking against local market share ranking and peer rating status. This also includes comparable pricing of products and services against peers operating in the same markets, and economic status of sector such as growth, maturity and decline.

 

External Verification: Audit of external sources including credit reference agencies, key social media platforms, recognition for industry awards achieved, such as Dubai SME100, membership to professional organisations’ and publicly listed qualifications of both the company and business owners.

 

Although we undertake detailed risk checks and only allow creditworthy business to apply for finance on our platform, no investment can ever be entirely risk free and even creditworthy businesses may default. A fundamental principle of Beehive is that we always encourage our investors to diversify their investments across multiple businesses to lower their risk of capital loss.

Resulting Risk Band
Beehive’s credit model results in all businesses being graded as follows

Dubai SME funds logo
Businesses referred via our partnership with the Mohammed Bin Rashid Fund (MBRF), financial arm of Dubai SME. MBRF provide a credit guarantee of up to AED 500,000.
Risk Band A Plus
Top tier funding request. Highest performing businesses with very strong financial record, excellent growth potential and the lowest perceived risk of all bands. Often supported by a Western parental guarantee.
Risk Band A
Excellent funding request. Very strong business with excellent financial record and growth potential.
Risk Band B
Strong funding request. Business shows strong financial performance and growth potential.
Risk Band C
Good funding request. Business demonstrates solid financial performance and growth expectations. Moderate perceived level of risk.
Risk Band C minus
Moderate funding request. Businesses that may not currently meet the exact criteria required of a C band business but do show decent financial performance and growth potential e.g. a profitable, growing business that currently generates a revenue under the AED 2.5m threshold. Assessed on a case by case basis.
Risk Band D
‘Challenger’ funding request. These businesses carry the highest perceived risk on the platform. They accordingly carry a higher gross return for investors.

Limitations
Beehive’s credit assessment is a detailed review of the businesses and Beehive reviews underlying documentation provided by the business which Beehive has deemed pertinent. However, Beehive does not undertake a financial audit of the company seeking funds and the company may provide documentation that is false which is not identified by Beehive’s processes.

 

Beehive’s assessment should not be taken as advice about whether money should be lent to a business. It is up to each investor to undertake additional diligence and investigation as they see fit.

 

The DFSA is not involved in the Credit Assessment
The business seeking financing, and any information provided about the business, are not checked or approved by the DFSA.