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 a large emphasis on only listing established & creditworthy SMEs on the platform.
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.
Beehive uses Artificial Intelligence (AI) in its credit screening process for SME financial data. This rule-based AI system leverages 10 years of accumulated experience in SME financials and thoroughly screens and analyzes the information businesses provide. The AI system collects and assesses hundreds of data points from financial documentation, helping generate more elaborated credit reports. It also flags inconsistencies to ensure a more secure and efficient credit assessment process.
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 AED 3 billion to over 1,500 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 |
|---|---|---|
| 2014-2020 | 9.72% | 11.36% |
| 2021 | 7.40% | 10.92% |
| 2022 | 10.12% | 10.85% |
| 2023 | 12.31% | 10.73% |
| 2024 | 13.08% | 10.71% |
| All amounts are in AED, Million. Data as of 15th September 2024, the data will be updated at least on a quarterly basis. |
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
The table outlines Beehive’s risk rating framework. It categorises borrowers based on their overall credit scores into distinct risk categories, each indicative of the borrower’s creditworthiness and likelihood of default.
| Overall Score | Risk Rating |
|---|---|
| 90 - 100 | A+ |
| 80 – 89.9 | A |
| 75 – 79.9 | B+ |
| 70 – 74.9 | B |
| 65 – 69.9 | C |
| 60 – 64.9 | C - |
| < 60 | D |
The overall credit rating is based on 4 main credit parameters and their respective weighting as outline below.
| Breakdown | |
|---|---|
| Bank statement | 45% |
| Financial statement | 35% |
| Business profile | 10% |
| Shareholder profile | 10% |
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 focuses 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 also referred to as ‘Repayment Coverage Strength’
- Repayment History with Beehive & Other Financial Institutions
- Supplier Repayment Analysis
Repayment Coverage Strength is a key metric derived from the ratio presented in our credit model scorecard. Beehive calculates this strength by analysing the borrower’s bank statements to assess their ability to meet repayment obligations. Based on these calculated ratios, Beehive assigns the borrower to different categories. The classification is as follows (x means times the monthly repayment amount):
Excellent > 3x
Very Strong 2.5x – 3x
Strong 2x – 2.5x
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.
The repayment strength classification and credit or risk rating provided by Beehive should not be taken as advice about whether money should be lent to the business or not.
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
