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A Survey Based Assessment

of Financial Institution Use of Credit Scoring for Small Business Lending, SBA Report 283, Nov. 2006

Project details

Whereas the use of credit scoring for consumer loans has been commonplace in banks for quite some time, the use of credit scoring for small business loans is a more recent phenomenon.  The study attempts to answer several questions related to the use of credit scoring in small  business lending as follows:

• How have banks incorporated credit scoring in their small business lending operations?

• How does credit scoring influence the availability of credit to small businesses?

• What factors predict the likelihood of the use of small business credit scoring by banks?

Three basic investigations were conducted for this research. The study investigated the use of credit scoring within banks. The study estimated how small business lending and micro business lending was impacted by the adoption of credit scoring by banks. Finally, the study investigated the factors that affected the likelihood that a bank would use credit scoring for small business loans.

– Cowan, Charles D. and Cowan, Adrian M.

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