Most lenders are not lending to the travel and leisure sector but we have now seen this loss of appetite for other business sectors heavily impacted by social distancing. These include:
- Hospitality and catering
- Advertising and marketing
- Bars, restaurants, pubs, hotels
- Market stalls
- Event companies
Why are lenders so affected?
The economic contraction from Covid-19 and the government’s groundbreaking support packages, mostly notable the Coronavirus Business Interruption Loan Scheme (“CBILS”) run by the British Business Bank, will have a large impact on the current lending environment.
Regular lending will, in the UK, be hit by a demand-side shock, impacting business cash flow, and affecting the quantum of lending that will surpass their underwriting criteria. In addition to this, they will lose their competitive position as CBILS lenders’ supported interest holiday will make their facilities cheaper and more attractive. This, therefore, will allow the CBILS lenders to ‘cherry-pick’ the best and most secure businesses.
Non-CBILS lenders will have to balance these factors and make underwriting policy decisions which may have great consequences for their own businesses.
These lenders are lending. Affordability and security will be key – there will be a higher level of scrutiny through the credit process. Sectors such as travel, retail and hospitality are already facing restrictions, but there are solutions if SMEs and their advisers are nimble.
Capitalise works with over 100 lenders and we’ll keep adjusting our lender criteria to maximise acceptance rates as policies change. We are receiving updates from all our partners in banks, challenger banks, alternative lenders and the fintechs to help you understand what is happening day by day, minute by minute.
What can you do to help your clients
At Capitalise, we are constantly monitoring our 100 plus lenders and making sure we have the latest information from each lender. This can change day by day, however, our Covid-19 Business Support Hub will keep you updated on the latest information.
We can introduce you to a wider market and quickly, with your help we can find your clients the funding they need to continue if this is available in the market. If the funding is available in the market, we will know.
Complete a funding search through the platform as usual and your partnership manager and our funding specialists will help you every step of the way.
To find out more about Capitalise or explore more of their insights – visit their COVID-19 Support Hub: https://capitalise.com/covid19