Moody’s Ari Lehavi Speaks on Lending to Small Business Owners

Ari Lehavi, Executive Director at Moody’s Analytics, spoke on a panel at Aspen Network of Developing Entrepreneurs’ (ANDE’s) annual conference in September, on ways to support small and growing businesses in emerging markets.

ANDE’s conferences and convenings bring together investors, capacity development providers, foundations, banks, corporations, DFIs and research institutions focused on helping small and growing businesses.

Ari highlighted the importance of understanding the lender’s perspective on providing financing to small business enterprises, and in particular, the need to help small businesses interact effectively with potential lenders and investors.

Small businesses tend to have more limited financial information to help lenders understand their performance. Additionally, many small business owners may combine their personal and business funds, which can further complicate the analysis. Lastly, given their smaller scale, these businesses can be more vulnerable to operational risks and business shocks, requiring lenders to understand these factors and monitor them closely. These considerations consume time and effort, which can be costly relative to the low monetary value of the loans.

Because of these dynamics, in order for small business lending to be attractive for banks, they must be able to do so in large scale, with a highly efficient underwriting process, with capable loan officers and with a reliable risk scoring mechanism.

Moody’s Analytics partners with financial institutions to address their needs for streamlining the loan process, enhancing lender skills and improving their risk scoring and analytics and is uniquely positioned to make the connection to help small businesses access credit.

 “Helping business owners understand lending requirements, and enabling lenders to streamline the underwriting process and upskill their staff, are key steps in unlocking the flow in credit to small enterprises”

This is consistent with Moody’s broader commitment to empowering small business owners, particularly those from untapped communities, with the tools and training needed to create a better future.

Through its Corporate Social Responsibility (CSR) initiative, Reshape Tomorrow, Moody’s is developing partnerships to give small business owners access to vital information about the credit process and to help connect them with lending institutions.

Find out more about CSR at Moody’s.