In the last few days we have seen European governments announce a range of financial support packages to assist businesses through this period of turbulence caused by the Coronavirus (COVID-19) pandemic. The UK government will guarantee an initial £330bn of loans to address cash-flow pressures for vulnerable businesses. Germany has announced an initial package of 25bn euros to include unlimited sized loans. Sweden has committed 45bn euros, Denmark 30bn and Norway 10bn so that credit supply isn’t threatened. This comes after announcements from Spain (300bn euros) and France (300bn euros) with many more countries following suit. The US has also unveiled a plan to deploy about $850bn into the economy to help affected businesses. Support for the business community is high priority.
These swift measures to support businesses through this difficult time, is a way to mitigate broader economic distress over the coming weeks and months. Whilst there still needs to be clarity on the details, with these announcements, there is expected to be an increasing demand from businesses seeking finance from many SME finance providers, to address short-term working capital pressures. Particularly from higher risk sectors including hospitality, leisure, events and creative industries.
Banks and SME lenders will be looking at how they can best serve this demand decisively yet intelligently and support the business community at this challenging time through a range of products including short-term, bridging, factoring and unsecured loans. Digital access to finance is more important now than ever, particularly where the pandemic may lead to severe disruption of bank branch networks and call centres. Approving credit using advanced technology, with a simple application journey, and automated underwriting process, to power quick yet accurate decisioning is going to be crucial.
We understand that sometimes you need technology, other times you just need to talk through your options. If you’re looking for advice on how you can improve your lending processes to help SMEs get through this difficult time, please get in touch.