Small Business News
Equifax Launches Merchant Data Network for Small Businesses
Equifax is launching a new service meant to help small businesses and lenders.
About the Merchant Data Network:
This week, Equifax announced its new Merchant Data Network. This Equifax Cloud-based service combines the bureau’s commercial data with credit card transaction data to give lenders a better picture of a small business’s finances. According to Equifax, this feature can help improve traditional commercial scoring by more than 8% — meaning that lenders can feel more confident about their credit decisions and businesses can access the capital they need.
Equifax says the Merchant Data Network will provide up to 60 months of transition history to lenders as part of the underwriting process. As the company notes, this aggregated credit card data comes from Fiserv as well as other leading data providers. In turn, the Merchant Data Network will cover more than more than 5.5 million businesses and over 50 billion credit card transactions annually.
What they’re saying:
Discussing this new feature, the Equifax SVP and GM of Equifax U.S. Information Solutions Commercial Business Sal Hazday stated, “Small businesses in the U.S. employ nearly half of the country’s workforce – making their financial health paramount to the health of our economy. Opening up new credit opportunities for small businesses is increasingly important, but making responsible lending decisions requires a strong understanding of true revenue and cash flow.”
Hazday continued, “With the Merchant Data Network, we’re partnering with organizations like Fiserv to make the most complete financial picture of a business available to lenders and service providers. Our shared goal is to advance the credit opportunities that small businesses need to thrive.”
Meanwhile, Fiserv’s Chief Data Officer and President of Data Commerce Solutions Prasanna Dhore said of working with Equifax, “Access to capital, especially for small businesses, has never been more critical than it is today. By contributing low-latency payment data to business credit reports, we are helping Equifax deliver deeper insights into the financial health of small businesses, which will enable lenders to make smarter loan decisions and improve access to credit for businesses with limited credit histories.”
My thoughts:
Although trusting data such as transaction information to a company like Equifax (which has endured at least one notable security breach) might not be a comfortable proposition for small business owners, this Merchant Data Network does seem as though it will be beneficial to some businesses who are in need of capital. Of course, there are already alternative small business lenders that have been looking beyond traditional business credit scores and using proprietary algorithms to underwrite loans. Still, this seems like a potentially positive step forward as it could help convince creditors to loan to small businesses that might not otherwise qualify for much-needed loans.
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