Lending for SME’s in 2021
In past times of turbulence and uncertainty, lenders lack of confidence in the economy, results in them demanding more financial information from SME’s looking to borrow.
But in these times, the usual play book may no longer be viable.
The pandemic has hit even some of the healthiest UK businesses hard. Temporarily rendering past credit assessments from being able to determine a business’s potential to repay.
The success of the UK’s economy recovering will rely heavily on how quickly SME’s can bounce back. In order for this to happen, businesses will need access to capital.
Lenders may need to start moving more towards projection-led assessments. Assessing businesses based on how they will fare in a post-pandemic world.
Scoping the market for new providers.
Due to the pandemic, many traditional banks could potentially curb their lending in some sectors to mitigate concentration concerns.
This may lead to SME’s been turned down for lending by their banks. Even if the business itself is creditworthy. Forcing them to look for alternative finance providers for their lending needs.
CBILS has shown how quickly banks can diversify and this could really open up the market for businesses. SME’s may need to rely more on professional brokers and providers to scope the market in order to find the best solutions.
No doubt that the beginning of 2021 is going to be difficult for many businesses. With cash reserves become ever more strained, there may be more uncertainty to come.
Only businesses that are well-prepared and have the ability to adapt, will be able to see this through. However, this will require been more open to new providers and utilising the expertise of brokers and advisors.
It is going to be a bumpy ride, but if we stay optimistic, we may see a much brighter end to 2021.