Systems and methods for evaluating the ability of borrowers to repay loans

• US 8,706,615 B2
• Filed: 12/04/2009
• Issued: 04/22/2014
• Est. Priority Date: 12/04/2009
• Status: Expired due to Fees

• Current Assignee: Robert A. Merkle
• Original Assignee: Robert A. Merkle
• Inventors: Merkle, Robert A.
• Primary Examiner(s): Bartley, Kenneth
• Application Number:
  US12/631,724
• Publication Number:
  US 20110137788A1
• Time in Patent Office: 1,600 Days
• Field of Search: 705/7.28, 705/38
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/28 Pre-payment schemes, e.g. "pay before"
• CPC Class Codes: G06Q 20/4016 involving fraud or risk level assessment in transaction processing
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

Systems and methods are provided for evaluating the ability of a borrower to repay a potential or existing loan. The systems and methods can use daily cash flows of the borrower obtained from one or more transaction accounts of the borrower. The cash flows can correspond to a period preceding the time of the analysis, and can include the most recent cash flow information in the transaction account. The cash flows can be adjusted to account for seasonal and day to day variations in the cash flows. The adjusted or non-adjusted cash flows can be trended, and projections of the cash flows can be generated based on the trends. The projected cash flows can be evaluated to provide an indication of whether the cash flow of the borrower is and will remain sufficient to facilitate repayment of the loan.

Claims

1. A computing device for evaluating an ability of a borrower to repay a loan, the borrower having a transaction account having payment records associated therewith, the payment records showing, on a daily basis, individual cash inflows or outflows for individual financial transactions, comprising:

a processor;

memory communicatively coupled to the processor; and

computer-executable instructions stored on the memory, wherein the computer-executable instructions, when executed by the processor, cause the computing device to;

access the payment records;

analyze the payment records and segregate the payment records into the individual cash inflows and outflows associated with the individual financial transactions;

determine a daily total cash inflow for each day within a plurality of days within a past period of time by summing the individual cash inflows for each day within the plurality of days within the past period of time;

determine a daily total cash outflow for each day within the plurality of days within the past period of time by summing the individual cash outflows for each day within the plurality of days within the past period of time;

determine daily net cash flows for the borrower over the past period of time by subtracting the daily total cash outflow from the daily total cash inflow for each day within the plurality of days within the past period of time;

smooth at least one of the daily net cash flows, the daily total cash inflows, and the daily total cash outflows to reduce day to day variations therein;

determine a trend of cash flow for the borrower over the past period of time based on at least one of the smoothed daily net cash flows, daily total cash inflows, and daily total cash outflows;

project at least one of the daily net cash flow, daily total cash inflow, and daily total cash outflow of the borrower over a period of time subsequent to the past period of time based on the trend of cash flow for the borrower over the past period of time; and

classify the borrower as belonging to a predetermined risk group based on the projection of the cash flow and a predetermined criterion.

2. The computing device of claim 1, wherein the predetermined criterion is a predetermined set of relationships between trends in at least one of the projected daily total cash inflow, daily total cash outflow, and daily net cash flow for the borrower.

3. The computing device of claim 1, wherein the computer-executable instructions, when executed by the processor, further cause the computing device to determine whether a cash flow of the borrower at a point in time agrees with the trend of cash flow at the point in time to within a second predetermined criterion and, if not, evaluate whether changes in the operating condition of the borrower have occurred.

4. The computing device of claim 1, wherein the computer-executable instructions, when executed by the processor, cause the computing device to determine a trend of cash flow for the borrower over the past period of time based on at least one of the smoothed daily net cash flows, daily total cash inflows, and daily total cash outflows by calculating a curve fit based on at least one of the smoothed daily net cash flows, daily total cash inflows, and daily total cash outflows.

5. The computing device of claim 1, wherein the computer-executable instructions, when executed by the processor, further cause the computing device to determine whether the cash flow of the borrower based on the most recent information stored in the transaction account agrees with the trend of cash flow to within a second predetermined criterion.

6. The computing device of claim 1, wherein the computer-executable instructions, when executed by the processor, further cause the computing device to assess one or more of the following with respect to the loan:

a multiple by which the projected daily net cash flow, daily total cash inflow, or daily total cash outflow of the borrower exceeds a financing cost of the loan;

how long the financing cost of the loan can be paid in view of the projected net cash flow;

how long the financing cost of the loan can be paid in view of the projected daily net cash flow, daily total cash inflow, or daily total cash outflow and a cash balance of the borrower;

the ability of the borrower to pay additional financing based on the net cash flow at the period in time and the projected daily net cash flow, daily total cash inflow, or daily total cash outflow; and

the ability of the borrower to pay additional financing based on the net cash flow at the period in time;

the projected daily net cash flow, daily total cash inflow, or daily total cash outflow; and

the cash balance of the borrower.

7. The computing device of claim 1, wherein the computer-executable instructions, when executed by the processor, further cause the computing device to identify types of expenses of the borrower and compare the types of expenses to the types of expenses normally present in an industry with which the borrower is associated.

8. The computing device of claim 1, wherein the information stored in the transaction account of the borrower includes the most recent information stored in the transaction account of the borrower.