With new product, local fintech aims to speed small business lending assessment | WilmingtonBiz

A young financial technology company has created a new product to help small business lenders – early in the decision process – assess a borrower’s risk level. The Lumos Business Report, announced recently by Wilmington-based Lumos Technologies Inc., enables lenders to use artificial intelligence resources without becoming AI experts.

CEO Brett Caines calls the Lumos Business Report “a natural language tool that can deliver information from . . . Lumos’ own datasets and from public domains.” In other words, the product uses artificial intelligence to gather and interpret pertinent information but uses non-artificial “natural” language to present the information to a bank’s loan officer or underwriter.

The intent, according to Caines, is to make an initial assessment of a small business loan opportunity as easy as possible, pulling in credit metrics and predictive models using large-language AI models – like ChatGPT – that have extensive data sets.

“We’re trying to help banks take that first step into artificial intelligence,” he said. “There’s nothing to implement; you just log into our portal and add the basics about the prospective borrower: how many employees does it have, the loan amount being considered, the industry it’s in and the purpose for the loan. You get a full write-up that shows risks as well as industry trends, unemployment rates and labor participation rates: all the types of things underwriters look at but in 30 seconds versus spending a day looking at a variety of websites.”

The report, Caines added, is organized in an “easily consumable way” with built-in analytics from Lumos’ existing analytic products that look at a potential borrower’s historic performance and predict its future performance. It is divided into three major sections:

1. Lumos’ Credit Qualification Grade, which predicts the expected loss of a loan opportunity and business over the next 12 months.
2. A write-up covering topics such as an overview of the business, including its operations, sales and marketing customers, partnerships, strengths and weaknesses and its leaders. The section also examines the borrower’s industry in general.
3. Benchmarks and data, drawing on three decades of SBA loan performance data to assess this lending opportunity relative to others historically. This section also provides information about top SBA lenders, loan pricing trends and an economic overview showing how current economic conditions affect the risk level of making the loan.

Caines said the two-year-old company has seen a good amount of interest from banks in North Carolina, Florida, the Northeast and the Midwest in this new assessment tool, which Lumos has demonstrated at several recent conferences.

“The Lumos Business Report bridges the gap between the limited data received during a loan inquiry or application and the in-depth analysis required for full credit underwriting,” he said. “With just five simple inputs – the business name/location, industry (NAICS) code, number of employees, and the amount and purpose of the loan – data is extracted from websites to gather additional information and generate a comprehensive report on the business and loan opportunity. It really is an easy step into the world of AI for banks.”

NOTE: This version of the story corrects the time in which Lumos Business Report data is collected and summarized. The correct amount of time is 30 seconds, not 30 minutes.