Fast and Flexible Credit for Tech Companies
By Ishara Gamage
A new Credit Evaluation Framework has been launched to provide credit facilities to Tech companies in the country under minimal collateral and conditions, Chairman of the Information and Communication Technology Agency (ICTA), Prof. Lalith Gamage, said in a press conference yesterday.
PwC Sri Lanka has provided technical assistance for this. In addition, it has received the advice of a panel of experts. According to him this framework has been designed with the recommendations of credit evaluation officers from several banks in order to streamline the mechanism further.
Seylan Bank, DFCC Bank, Union Bank, and NDB bank have already expressed their willingness to consider the new framework when assessing technology companies for debt financing. Commenting on the new framework, ICTA Chairman Prof. Lalith Gamage said, «ICTA, as the apex body for IT industry, is proud to launch this novel credit evaluation method, which is a timely approach to support emerging tech startups and existing tech companies to expand their businesses at a time when the tech startup ecosystem started to revive the country›s economy; it is vital to extend financial support for the growth of these tech companies, also considering their huge export capacity.
This alternative credit evaluation process will enable tech companies to access funding without the need to rely on personal collateral». Expansion of a tech company is a daunting process due to challenges in obtaining debt facilities, as traditional credit evaluation methods require borrowers to provide tangible collateral in order to be eligible for a business loan.
Furthermore, technology companies are evaluated using existing generic credit evaluation frameworks, which have inherent shortcomings in evaluating the merits and demerits of a technology company. Against this backdrop, the launched framework becomes an alternative mechanism for the traditional framework. The new framework has been built around four pillars, namely: Founder, Market, Product, and Financials and has thus provided technology companies to be evaluated on quantitative and qualitative factors that are most relevant to them.