Enigma, a data science company that provides comprehensive intelligence about the financial health and identity of more than 30 million U.S. businesses, announces the spin-off of Prime, a lending platform that will make it easier for financial institutions to extend loans to small and medium businesses (SMB).

More than 50% of small businesses do not have sufficient access to financing, according to a recent Federal Reserve Survey, and the pandemic has introduced even more challenges for small business owners. Small business lending is often limited by the inability of financial institutions to assess the risk of extending credit to a given business.

Community and regional banks have especially faced challenges providing financing to the small businesses in their communities due to limited resources and a lack of reliable data about business health. Although these banks have strong relationships in their local economies, the high cost of originating and servicing small business loans has caused them to struggle to compete with large financial institutions.

Prime will broaden access to advanced data analytics, risk modeling, and capital markets to smaller financial institutions like community banks, as well as more established lenders. This will ultimately lower the cost of capital for small businesses, as more banks will be able to efficiently originate, monitor, and securitize small business loans.

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Prime’s dashboard will allow banks to upload loan books and see advanced indicators like Enigma’s data on business revenue and growth, in order to make risk and lending decisions more efficiently and confidently. With Prime, small banks will be able to gain improved insights into their SMB credit portfolios and will finally be able to syndicate, swap, and securitize exposures.

Enigma is partnering with leaders in the small business financing space, including Capital One, Third Point Ventures, Customers Bank, and NEA to launch Prime with a funding commitment of $49 million. Prime, which will begin serving the market in the second half of 2022, will provide new loan opportunities for lenders while opening up a new financing channel for small businesses.

Prime’s lending solutions will be powered by Enigma’s proprietary SMB identity and financial health data, covering more than 30 million U.S. businesses. Enigma’s data provides unique visibility into the monthly revenues, growth, and detailed firmographics of a small business.

Prime’s launch partners provide a range of deep experience with SMB lending.

Capital One, a current Enigma client and investor through Capital One Ventures, has seen firsthand how better data about small businesses leads to growth. Capital One brings unparalleled expertise in the small business ecosystem, acquired by listening to and learning from the millions of businesses they serve every day. Capital One is committed to supporting all businesses, from budding entrepreneurs and growth-stage companies to more established, high-revenue enterprises.

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Third Point Ventures, an investor in Enigma and one of the early investors in the revolutionary consumer lending platforms Upstart and SoFi, will bring expertise in developing securitization programs to Prime. While over 10% of consumer loans per year are securitized, less than 1% of small business loans are securitized, limiting capital liquidity and financing availability.

Customers Bank is a digital-forward top 100 bank in the nation with nearly $20 billion in assets that used technology to participate in approximately 347,000 Paycheck Protection Program loans with an aggregate value of $10 billion through the COVID-19 Pandemic, and recently launched a blockchain-based real-time payments platform for cryptocurrency and digital asset institutions.

NEA is a leading global venture capital firm and early investor in Enigma. NEA has partnered with founders on initial go-to-market strategy for many successful platforms like Jet.com and Coursera.

“Building on our success in digital consumer lending, bringing digital lending to the SMB market is a logical and important strategic priority,” said Customers Bank President & CEO Sam Sidhu. “We are excited to be a co-creator of Prime using insightful data to craft and shape products and services to the specific requirements of each current and prospective borrower, depositor, and specialty financing customer as we help them take on tomorrow.”

Enigma CEO Hicham Oudghiri will be acting as executive chairman and interim CEO of Prime during the transition period. The new leadership team will be in place by the first half of 2022.  “We are excited about what the months ahead will look like, knowing Prime’s mission is to unlock growth and lending for all kinds of communities,” said Oudghiri.

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