Where do small business loans go next?
In this AltFi 2021 Alternative Lending Market State Report article, we explore the future of alternative lenders supporting the SME market.
Image source: Simon Cureton / Funding Options and Roy Warren / Folk2Folk.
This is an excerpt from the AltFi State of Alternative Lending Market 2021 report, which is available for free here.
In a year where small businesses have been among the hardest hit, it’s safe to say that alternative lenders have stepped in.
At the onset of the crisis, many SMEs were excluded from government-backed financing programs and feared that liquidity would not be deployed quickly enough to prevent them from going bankrupt.
Quickly, alternative lenders and digital banks began to get accreditation from the British Business Bank to help distribute some of the money to SMEs affected by Covid-19.
But, a year on and almost on the other side of the crisis, where are small business loans heading next?
Hindsight is 2020
A recent survey by AltFi of alternative lending executives found that the vast majority of alternative finance providers have been negatively affected by Covid-19. Almost two-thirds (60%) said their loans had been negatively affected by the pandemic, while the remaining 40% were unaffected.
Looking back over the past 12 months, the impact of Covid-19 on the alternative lending industry is undeniable, but many still remain incredibly optimistic for the future.
âI feel more confident in the context where we are post-pandemic,â said Simon Cureton, CEO of lending marketplace Funding Options, who works with Capital on Tap, Funding Circle, Iwoca and Market Finance for n ‘ name just a few. . âFrom an economic standpoint, we could really start to see a resurgence in the economy throughout the year and into 2022.â
âI think we’re going to see an increase in technology and data-driven solutions that are highly suited to the needs of SMEs on an individual basis. In addition, many vendors have been forced to adopt new digital methods for the first time and over the past year we have seen so many digital innovations that will continue, âexplained Cureton.
It was a story as old as time, with the big banks unable to adapt quickly to the ever-changing situation at the start of the pandemic, while the smaller alternative lenders “were much more nimble and able to adapt quickly. to changing market conditions, âCEO Adding Financing Options.
Confidence is the key
While looking back over the past year is helpful in seeing where alternative loans will end up, it’s not the only way …
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