How Capital on Tap accelerates decisioning to expand business credit access

Simon Rodrigues, August 2022

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“We’re trying to be the best credit card custom-built for small businesses, and Wiserfunding enables us to make that happen. When we wanted to raise our automated credit limits, Wiserfunding enabled us to accelerate our underwriting process and credit decisioning capabilities. They help us to win in a very competitive space that has huge incumbents.”

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Ara Thiyagarajah, Director of UK Credit and Collections       

Capital on Tap provides an all-in-one small business credit card and spend management platform, making it easy for small businesses to manage their business spending, access funding, and earn cashback, travel, and gift card rewards. Over 200,000 small businesses have spent £4 billion on their Capital on Tap Business Credit Cards across the US and UK.

Capital on Tap makes business funding and spending simple, saving business owners time and money. With a 2-minute application process, the majority of applicants receive instant credit decisions and immediate access to credit. Business owners enjoy access to unlimited free 1% cash back, credit limits up to £500,000, and as many employee cards as they need for their business to run smoothly and efficiently – all for free.

The challenge 

Capital on Tap’s value proposition is based on automated, accurate origination so that business applicants can access credit within minutes of applying. Prior to Wiserfunding, their existing systems allowed for automated decisioning for credit lines up to a portion of the £500,000 maximum limit. Larger lines for bigger customers required manual review by individual underwriters. To meet their scaling ambitions, the team needed an accurate, reliable solution that would give them the confidence to raise the automated credit limits.

Objectives 

  • Increase Capital on Tap’s credit limits for automated credit card decisioning
  • Safely enable Capital on Tap to lend to larger SME customers without increasing bad debt or defaults

Enabling faster, safer underwriting

Frictionless credit decisioning

Once a new business applies online, Capital on Tap’s underwriting engine pulls in personal and business information through a network of APIs. Wiserfunding’s API delivers information that verifies key customer details and generates an instant credit assessment that includes an SME Z-Score, Bond Rating Equivalent (BRE), and Probability of Default (PD). These variables are then fed into Capital on Tap’s proprietary credit algorithms to determine the customer’s credit approval and limit; if the applicant’s limit is below the automated limit cap, then a decision will be sent within 30 seconds of completing the application.

Empowering underwriters for larger credit lines

When applicants apply for larger credit limits beyond the automated threshold, their data is shared with an underwriter for manual review. Wiserfunding’s solution provides a detailed report aggregating the applicant’s relevant credit variables in three groups: proprietary credit variables, like the SME Z-Score, BRE, and PD; financial ratios, such as P&L and balance sheet ratios from filed accounts; and non-financial data, such as corporate governance details and macroeconomic indicators. The report is accessed via Wiserfunding’s front-end portal and can be exported via PDF, enabling the underwriter to use it to make a manual credit decision or share it with stakeholders. Any further escalation to internal decision makers uses the Wiserfunding report as the primary source of truth. 

Expanding into portfolio monitoring

Today, Capital on Tap uses Wiserfunding at the beginning of the customer journey to make new lending decisions. Soon, the team will use Wiserfunding’s scores throughout the credit lifecycle to monitor and manage changes in the credit portfolio. With greater portfolio insight, Capital on Tap can reduce its cost of lending by managing down bad debt and lowering provisions as their book evolves and matures.

Results: Accelerate safer, smarter lending

Raising new limits. Capital on Tap has doubled their automated credit limit, so larger applications that were previously manually underwritten are now completed instantly. In the UK, 95% of applicants receive a decision in under 30 seconds, and 99% receive a decision within one day. The team has a path to continue increasing their automated credit limit without jeopardising portfolio health.

Growing the target audience. Partnering with Wiserfunding has enabled Capital on Tap to lend larger amounts to larger entities without jeopardising portfolio health.

Reducing lending costs. Compared to other credit assessment solutions, Wiserfunding provided more accurate risk assessment outputs, including applicants’ PD and SME Z-Score. When compared head-to-head, Wiserfunding’s outputs were more accurate than comparable risk assessments. This has enabled Capital on Tap to effectively manage the bad debt in their portfolio, improving margins and increasing trust with investors so they can scale their business further. 

Helping David beat Goliath. Capital on Tap’s mission is to provide the best credit card custom-built for small businesses, and Wiserfunding’s solution empowers Capital on Tap to serve their customers in a scalable way. With automated decisioning for a broader pool of applicants, Capital on Tap can provide decisions with higher credit limits in minutes; the same credit would require weeks or even months to approve at traditional banks, often with lower limits. Speed and accuracy give Capital on Tap an edge over their competitors, which is essential for their future growth prospects.