Software measures borrowing capacity of small businesses.

Credit Management Solutions Inc. has released a lending system specifically for evaluating the creditworthiness of small businesses.

The software, called InCredit, is also suitable for use by leasing companies, Credit Management said. It was developed in conjunction with Alco Capital Resource Inc., a large leasing organization based in Macon, Ga. Alco is a current user of the system.

InCredit is distinct from commercial and consumer lending products because it does evaluations based on the creditworthiness of the business and the owners, said Nancy L. Weil, director of marketing for CMSI.

The program links up with consumer credit bureaus for personal credit reports, and with business bureaus, such as Dun & Bradstreet or TRW Business, for business reports. It then combines the information for easy review.

No Track Record?

Users can set a number of system parameters and thresholds to automate evaluations. For example, since business credit bureau reports are more expensive than consumer reports, banks don't like to call business bureaus indiscriminately, said Ms. Weil. InCredit will request a business bureau report only if an application meets certain parameters defined by the lender, such as length of time in business or loan amount.

A lender may determine, for instance, that if a business is less than two years old it doesn't have a long enough credit history to make a business bureau call worthwhile.

Users can also manipulate lending variables such as down payment, terms, amount financed, and interest rate.

Lenders can pick and choose from a variety of reports available from business bureaus. Users can pull detailed or summary reports and view financial work sheets showing the organization's income and debt level.

An important capability, particularly in the leasing arena, said Ms. Weil, is tracking an institution's current exposure to each business customer.

Judging Debt Load

Lenders need to determine whether a company has reached the limit of its ability to carry debt. This information, provided by the program, wouldn't show up in a credit report, she said.

Users can also establish profiles, telling the system to automatically route specific loan applications to particular agents, based on level of expertise.

InCredit was developed, said Ms. Weil, because banks are becoming more interested in the small-business market, a very profitable segment of commercial lending.

"With the refinancing boom over, lenders are looking for their next big market," she said.

CMSI, based in Columbia, Md., provides credit automation and loan marketing to the financial industry. The vendor's clients include NationsBank, Wachovia, and Novus Financial.

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