The Coronavirus pandemic sees SME lenders stop lending to entire sectors
Rangewell, the business finance specialists have updated their rolling ‘Lender Pulse’ report:
Lender Pulse is a multi-week insight into the modus operandi of business financiers who are the lifeblood of British SMEs. Rangewell believes that business lending is the ‘canary test’ for the UK economy and hope this report will help track the ongoing economic effects of the Coronavirus.
The second instalment report on Thursday 12th March have found these key trends:
- Many lenders are taking confidence from the very strong support to SMEs that was a mainstay of the budget yesterday.
- The announcements from Bank of England and HM Treasury yesterday are being absorbed by the high street banks and will inevitably lead to increased lending.
- Importantly, Rangewell strongly believes that the HM Treasury “helicopter cash” will be very much a case of feast or famine
- Quality lending sectors less affected by Coronavirus (healthcare etc) will benefit from offers of long-term funding at extremely attractive rates.
- Whilst those sectors requiring support the most (retail, hospitality, travel etc) will still not be eligible at all due to concerns over long-term survivability. The high street and other lenders will only lend if they believe they will get their money back.
- A small but well known unsecured lender has stopped lending to travel agents, tour operators and events businesses.
- A couple of lenders specialising in hotels and hospitality and retail have informed Rangewell that they are willing to continue to credit approval deals – but they will be holding payout of the loan for 30 days.
- Rangewell has had an increase in the number of questions in the last 48 hours with regard to supply chain vulnerability.
- Rangewell has already seen a number of borrowers who were in the process of arranging long-term lending (10 years plus) from high street banks reviewing their fixed Vs floating rate options.
- Rangewell has seen ‘switched on’ borrowers with long-term horizons reviewing refinancing options – with fixed-term loans for high-quality borrowers in many cases offering significant monthly savings.
- Rangewell has had a number of partners ask if“Funding Circle are still lending” given the recent decline in the share price. – Rangewell can safely say from experience over the last couple of days that they are very much still lending, their systems remain best in class and their credit and support teams were replying to emails as late as 9.32pm last night. To date, Funding Circle has been the poster child of the new lenders in terms of dealing with such a fast-changing situation.
- Funding Circle has told Rangewell that they have picked up business from other lenders who haven’t had the credit knowledge, systems or staffing to deal quickly with loan requests over the last few days.
- A number of lenders have contacted Rangewell with news that they are trialling or getting ready for remote working.
- Interestingly, Rangewell has noticed the more the trendier and tech-based a lender is the more likely they are to be getting ready to work remotely.
Nic Conner Rangewell’s research consultant said:
“The strong support to SMEs shown by the government in the budget has been welcomed by the business finance community. Many lenders Rangewell spoke to yesterday are taking confidence from it and the announcements from the Bank of England. Undoubtedly these measures will inevitably lead to increased lending by the High Street Banks”.
“ There is a worry though that the Treasury’s “helicopter cash” will very much a be to the benefit to those SMEs who have not been seriously affected by the Coronavirus and are still performing strongly.
Whilst those sectors requiring support the most like food & drink, freight and tour operators are finding they are still not eligible for credit at all due to concerns lenders have on the lasting impact of Coronavirus will have on those industries”.
