Client

SFLG - Department for Business, Innovation and Skills (BIS)

SFLG, the Government’s principal intervention in the debt market, has, for over 23 years, sought to help SME’s with viable business propositions but insufficient collateral upon which to secure a loan to access the debt finance that they need. SFLG allows lenders to provide loans to businesses and obtain a guarantee (70-80% of the outstanding balance) if the loan defaults. Premiums are collected quarterly via direct debit for each loan representing between (0.5-2% of the outstanding balance).

Project Objectives

To deliver current and future predictions of the SFLG Financial Model to include:

• Current financial figures by quarter including Total amount Claimed from the Government, Total amount collected through Premium collection, Total amount collected through Loan recoveries
• Future predictions of Defaults and Usage for the SFLG Scheme utilising a number of internal and external factors

Strategy, Tactics and Skills

• Produced current default figures and premiums collected based on a number of data sources
• Predicted the future growth of the loan portfolio - using over 20 years of historical information, along with external factors such as GDP growth, Retail Price Index
• Predicted the future defaults rates and cost to the government – using 20 years of historical information
• Predicted the future Premiums to be collected for the government – based on complex loan scheduling formula, including Repayment holidays, multiple draw-downs of amount and re-schedules during the loan’s life.

Developed a multi-dimensional data mart and supporting transformation processes to update the model on a quarterly basis. This included the collection of individual direct debit and cheque payment transactions, and the collation of invoice transactions from each Lender.

Results and Evaluation

The SFLG Financial Risk Model is distributed to government departments to indicate the overall exposure of the SFLG scheme. This includes quarterly figures and future portfolio views for each Lender.

• Premium collection accuracy is within a tolerance of +- 2%
• Predicted default rates and amount are within a tolerance of +- 5%

See how TOMA can help deliver reporting solutions using advanced analysis techniques