A new study by PayNet shows that equipment finance lenders can achieve double digit growth through a smarter application process. Although credit approval rates vary by lender and market segments, PayNet’s recent study addressing small ticket lenders showed an 86% approval rate.

ELFA forecasts the industry to grow originations volume 5.5% in 2014 with sluggish growth continuing in 2015. This is against a backdrop of the S&P 500’s recent 6.5% fall and zero growth in Europe. However, most equipment finance executives face expectations for double-digit growth in originations in 2015, according to Paynet. The challenge for executives is to construct a business plan that can deliver double-digit growth.

This study centered on the approval rates for A and B quality credits, which although high, still provide room for more expansion. Many of the declines in A and B quality approvals are due to a lack of information from “thin” information or insufficient analytics to assess the applicant’s credit quality, Paynet’s study found. Additionally, 2,363 additional credit applications could be approved as a result of thicker, more robust credit information and smarter analytics, producing a 6% increase in originations volume from their current credit application process, according to Paynet. Combining growth achieved through a smarter application of their credit process with the organic growth of 5.5% means double-digit plans are viable for 2015.

PayNet MasterScore Version 2 formed the basis to increase approvals without going outside their credit box. PayNet MasterScore V2 is the newest empirically derived and statistically sound credit score developed specifically for commercial finance lending. In the development sample, MasterScore V2 has been shown to deliver 17.7% more approvals of credit applicants for the same amount of credit losses. MasterScore V2 is able to deliver more approvals at the same loss rate because of its segmentation into 29 different industries and borrower sizes.

“PayNet MasterScore V2 does a good job of delivering more credit approvals at the same risk profile. Our customers can buy deeper and buy smarter with this technology,” said William Phelan, president of PayNet.