Evaluating credit worthiness of small and growing technology businesses

Abstract

This paper is meant to give an input to African banks, finance institutions and lenders to provide better models to evaluate creditworthiness for small but growing technology businesses. The researcher draws from the experience of technology businesses who many a times have inadequate widgets or inventories as collateral and end up being subjected to stringent requirements imposed by the financial institutions. Financial institutions lack appropriate models to evaluate credits of technology companies without collateral. This paper recommends a framework for design and implementation of a credit scoring model that is flexible to the emerging market trends and does not advocate for one methodology or technology but aggregates multiple factors to determine the credit worthiness of a small tech company.