Innovation Loans look for those doing something different. As part of the UK’s innovation agency, they support innovation development within the economy and have supported over 110 SME businesses across the past two years. Their goal is to remove the financial barriers from research and experimental development, filling the gap between traditional grant funding and debt funding in the SME market.
As Head of Lending and Investment Operations at Innovate UK, Emily Hogg is responsible for ensuring that the credit team making lending decisions have access to sound insights and reliable information, maximising chances of repayment and minimising risk.
“We have a bias for innovation in our decisions, we’re looking for something different, people who are changing something or changing a marketplace and who can quantify it into a project. It could be developing innovative packaging or a new femcare product, we’re interested in retail- and consumer-based projects too, not just businesses trying to hit their R&D timelines," - says Emily.
Achieving this starts with the right information about the businesses applying. That’s why Innovate UK approached DueDil to help shape their credit decisioning process in order to assess loan applications at speed.
This mission became even more urgent this year as Innovate UK was called upon to play a key role in disbursing a £750m support package for the UK’s most research and development intensive small businesses in order to keep innovation moving forward. In this critical moment, it was essential for the team to move fast, but also stay smart about the decisions they were making.
Confidence and Control
The Credit team at Innovate UK are the first line of defence for assessing the viability of an application. Using DueDil, they focus on the core metrics that indicate the financial and ethical soundness for investment.
“For all of our credit applications we have key checkboxes we need to complete. We start with checking that they have sufficient equity and share capital to warrant lending. For example, making sure if they are over 3 years old, that they are not an ‘undertaking in difficulty’ – were more than half of its subscribed share capital has disappeared as a result of accumulated losses - which disqualifies you for state aid,” explains Emily.
DueDil also helps them zero in on the people behind the scenes. “We can easily check directors on DueDil, making sure we are aware of any PEPs (Politically Exposed Persons), no disqualified directors and no sanctions against any of the personnel,” says Emily.
Finally, they can take a closer look at financial stability by checking time to invoice or missed invoices to gauge cash flow stability, and then export credit scores and save them to the individual company file.
Unlocking B.I.G data
A key element of due diligence for Innovate UK is mapping the key stakeholders in applicant businesses, a task that can be extremely complicated for directors with multiple ventures. The high volume of new information and the rapid pace of decay makes mapping the complex relationships between companies, directors and shareholders a challenge for the team.
This is where DueDil Business Information Graph (B.I.G.) proves its unique value.
“Using Companies House, we would have to look into all the confirmation statements to find other companies [or directors], look them up individually and create our own web of ownership, but DueDil just does it for us,” says Emily.
With all the information the team needs available in DueDil’s top line, ready for export, checks can be conducted quickly and accurately.
“With DueDil, I’d say it takes us five minutes to get all the information we need. I think if we had to do this via Companies House it would take us an hour to an hour and a half. There’s also room for manual errors if you look in the wrong place, but inDueDil you can’t miss anything because it’s all there to see,” explains Emily.
2020 has seen substantial growth in the Innovate UK team, going from 8 people in March to 22 team members in the second half of the year as they look to allocate £210m of investment by the end of the year.
Similarly, they are processing an increasing amount of applications, up to 45 per month, alongside the constant business of managing and monitoring existing customers.
With growth comes new processes, with the recently formed Portfolio Operations team taking charge of ongoing customer management. Using custom lists in DueDil, this team monitors changes in employees, board members, new accounts and year ends to ensure their systems are up to date on all key intelligence to provide the best ongoing service.
Innovate UK have taken a suitably innovative approach to their own operations. By automating the manual work of credit and risk assessment intelligence gathering with DueDil, Innovate UK can scale their mission to drive daring developments in UK businesses while guarding against risk now and in the future.