Bonside Offers Net Lease Landlords a New Rating Service for Retailers

Bonside, Inc., a company that has focused on financing for small-to-medium retail operators for a few years, is taking a step across the divide to work with landlords.

Where once the company helped retailers afford new brick-and-mortar locations, they’re now looking to develop services for the property net lease owners, like providing insight into a potential tenant’s financials.

From the beginning, offering potential financing meant getting information from the retailers. “We plug into their data sources, we understand how the business operates, we analyze that data, we form a view on it, we assess it,” Chief Executive Neha Govindaraj of Bonside, told GlobeSt.com. “We underwrite these businesses using the technology that I just described, and when a business meets our bar, we provide them growth capital to expand their footprint and open their next location.”

To have enough operational information on a company to determine whether to risk financing them means the likelihood of having more data than a typical major credit agency has from third parties. This new product, which they call scorecards and launched a couple of weeks ago, provides a “very consistent and standardized and objective” way to provide insight to the landlords, Govindaraj said.

“Many of the businesses that we generate scorecards for are private companies, and they might not have a formal credit report that they can publish for their business,” she added. “And so, we define a scorecard for them, which is an alternative that provides the right detail on the business and the right level of detail for the [landlord] to be able to make an assessment on the quality” of the retailer.

The scorecards are aimed at a landlord who needs an assessment on a private company, from a mom-and-pop startup to a middle-market company doing up to a few hundred million dollars of business annually.

A landlord currently pays $1,500 for a single scorecard. The retailer can get into the program for free by providing the data.

The data in a scorecard requires some manual work on the part of the property owner. Eventually, there might be automated integrations with some of the more popular software packages the landlords use. “We've got folks that are working on brand new developments and are looking to leverage score cards for that,” says Govindaraj. “Other folks are looking at grocery, anchored retail that's been around forever, and looking to run scorecards on releasing certain properties within there. So, the use case varies.”

It also seems likely that there will ultimately be a subscription version, rather than all à la carte, for larger organizations that need regular access to determine potential renter eligibility.