While "The One-Minute Lender," is interesting, it should have been written with some caveats.

Your suggestion that a loan officer leave the fate of the company to a questionable calculation so that he can sleep at night fails to address the duty of a loan officer: to completely evaluate all the strengths and weaknesses of a business, then make a decision. That is what they are getting paid to do in the first place. To permit the H-score to be the pivotal decision criteria is careless.

If loan officers all over the country are going to subscribe to the model presented and decide the "fate" of a business, then this is indeed reckless. Financial models are tenuous, at best, any your glib support for this one is the sort of attitude that gives financial science a bad name.

The model's constraints on the dollar size, geographical locations, and the small sample size raise questions about its statistical validity. This point is extremely important, but is completely ignored in the article.

The formula is useful as a management indicator, as are a number of others that have been available for some time, and it should be treated as such.


INC. replies: We agree with Mr. Dougherty that there are some potential problems with statistical models. We invite him and other readers to read the article again. The "glib support" that concerns him was written with tongue in cheek.