PayNet releases AbsolutePD, for Canadian commercial lenders to provide forward looking probabilities of default on each borrower where financial statements or tax returns are unavailable.

This new tool assists Canadian commercial lenders to manage the risk of each borrower and their loan portfolios by province, industry, borrower segment or risk grade through AbsolutePD Portfolio Manager.

Canadian small businesses account for 41% of private sector GDP and over 77% of all private jobs created in Canada, and remain a growth engine for Canadian lenders.

Due to the after effects of the recession, many lenders maintain high levels of loss reserves in their loan provisions today. Excess reserves raise the cost of capital for lenders at a time when credit risk is low.

To-date, Canadian lenders have managed small business exposures with a limited understanding of their credit risk, because risk ratings are time consuming and expensive. Credit scores are backward-looking which provide counter-cyclical results, over-estimating capital requirements in sound financial times and under-estimating capital requirements in adverse economic conditions. With exposure to thousands of private companies, this limited understanding can be costly for Canadian lenders, particularly during times of economic uncertainty like the 2008-09 recession. AbsolutePD helps the reserving process with dynamic probabilities of default for each of the next 8 quarters. The Borrower Profile reports in AbsolutePD pinpoint emerging credit risk and lower the cost of loan review.

“PayNet AbsolutePD is now available to put managers in charge of their small business credit portfolios,” states William Phelan, president of PayNet. “AbsolutePD creates the probability of default for private companies by combining extensive loan payment information from our data consortium with macroeconomic factors such as Gross Domestic Product.”

“We use AbsolutePD in our U.S. businesses and are excited it is now available for use in Canada,” states Steve Sands, Chief Credit Officer, Element Financial.

PayNet, Inc. Canada is the premier provider of risk management tools and market insight to the commercial credit industry, collecting real-time loan information from leading Canadian lenders and turning it into actionable intelligence. The company's proprietary database -- updated weekly -- is a growing collection of commercial loans and leases, worth over $78 billion. Using state-of-the-art analytics, PayNet converts raw data into real-time market intelligence and predictive information that subscribing lenders use to manage risk, lower operating costs, originate more loans and improve their business strategy. The company is based in Toronto, Ontario. For more information, visit paynetonline.ca.