The company issued a press release on Thursday (Jan. 24) announcing the addition of Moody's Analytics RiskCalc Small Business solution, a tool designed for small business lenders to augment their risk analysis of private companies.
CapX noted that Moody’s Analytics' tool addresses the pain point of lack of access to historical data on small businesses seeking financing. That lack of data makes small business finance a risky operation for many lenders, while financiers are forced to spend resources on deeper risk analysis with lower returns.
"The returns usually aren't there to spend a lot of time and money performing deep dives on smaller companies, but using Moody's Analytics RiskCalc Small Business solution to adjudicate credit finally makes these smaller-ticket loans feasible for us," said CapX Partner Eric Starr in a statement. "We have not been able to find a comparable tool that incorporates both tradeline and financial statement data."
In another statement, Moody's Analytics Director of Product Management Ed Oetinger said the partnership with CapX will help the firm expand into an underserved segment of the market.
"Assessing the creditworthiness of small businesses in a cost-effective manner is one of a lender's most challenging tasks," he said. "The RiskCalc Small Business solution opens doors to firms like CapX to capture market opportunities that may previously have been viewed as too unprofitable to pursue."
Moody's Analytics first launched its small business credit risk analysis solution last year in an effort to aggregate data from a broader array of sources to underwrite small business loans.
The solution launched at a time when the firm’s analysis revealed only about half of loan officers were reporting a "modest" loosening of credit standards.