Simon Cureton/Funding Options and Roy Warren/Folk2Folk.
Where is small business lending heading next?
In this feature from AltFi’s Alternative Lending State of the Market Report 2021, we explore what’s next for alternative lenders supporting the SME market.
This is an excerpt from AltFi’s Alternative Lending State of the Market Report 2021, which is available for free here.
In a year where small businesses have been some of the hardest hit, it’s safe to say that alternative lenders stepped up to the plate.
Early on in the crisis, many SMEs were left out of the government-backed funding schemes and were worried that cash wouldn’t be deployed fast enough to save them from going under.
Quickly, alternative lenders and digital banks began to gain accreditation from the British Business Bank to help dish out some of the cash to Covid-19-hit SMEs.
But, a year on and nearly out the other side of the crisis, where is small business lending heading next?
Hindsight Is 2020
A recent survey of alternative lending executives conducted by AltFi found that the vast majority of alternative finance providers have been adversely affected by Covid-19. Nearly two thirds (60 per cent) said that their lending was impacted adversely by the pandemic, while the remaining 40 per cent were unaffected.
Looking back over the past 12 months, the impact of Covid-19 on the alternative lending sector is undeniable, but many still remain incredibly optimistic for the future.
“I feel more confident in the context of where we are post-pandemic,” said Simon Cureton, CEO of lending marketplace Funding Options, which works with the likes of Capital on Tap,Funding Circle,Iwoca and Market Finance to name but a few. “From an economic perspective, we could really start to see a resurgence in the economy throughout the rest of the year and into 2022.”
“I think we are going to see an increase in tech and data-driven solutions that are very much bespoke to SME needs on an individual basis. Also, a lot of providers were forced to adopt new digital methods for the first time and over the last year, we’ve seen so much digital innovation which is just going to continue,” Cureton explained.
This was a story as old as time, big banks unable to quickly adapt to the ever-changing situation at the beginning of the pandemic, while smaller alternative lenders “were much more agile and able to pivot quickly to changing market conditions,” the Funding Options CEO added.
Confidence Is Key
While looking back over the past year is useful to see where alternative lending is going to end up, it’s not the only way...
Want to keep reading? Find the full feature in AltFi’s Alternative Lending State of the Market Report, out now!