EFL has spent over six years developing and pilot testing new technology.
Entrepreneurial Finance Lab has developed and rapidly spread and scaled-up tools to identify high-potential entrepreneurs and perform credit scoring. Tens of thousands of entrepreneurs across dozens of countries and languages have used the EFL application, from 1-person microenterprises borrowing $800 to medium sized enterprises receiving financing of over $500,000.
Results
EFL applications are able to meet and exceed the predictive power of credit scoring models in developed countries, which use audited financial statements and require a credit history.
Our test can be used on microenterprises and SMEs who don’t have financial statements and credit histories.
Simulated impact on these samples show a reduction in default from 20-45%. Ginis of 40% or more.
EFL partner banks triple their lending volume without increasing risk, tapping into new segments with little competition.
Source: http://www.eflglobal.com/
EFL Director Dr. Bailey Klinger explains the Entrepreneurial Finance Lab's approach to helping small and medium-sized enterprises in the developing world gain access to financing. EFL was one of the winners of the G-20 SME Finance Challenge.
Who Started EFL?
EFL began initially in 2006 as an idea of co-founders Bailey Klinger, a fellow at Harvard’s Center for International Development and Asim Khwaja a professor at the John F. Kennedy School of Government at Harvard University. They were struck by the fact that entrepreneur’s access to finance could be such a problem in South Africa, a country with a financial system more developed than many OECD countries. After spending some months analyzing the problem, Asim and Bailey focused on low-cost screening tools and alternative financial contracts as methods to stimulate entrepreneurial finance.