Managing the post Covid-19 recovery and supporting growth - the opportunity ahead

The industry has provided over £70 billion in finance through government Covid-19 lending schemes to over 1.5 million small and medium sized business applicants to date. This comes alongside the provision of non-scheme lending and helping businesses struggling with pre-Covid-19 debt with a range of forbearance measures. With repayments beginning to fall due on these facilities in June 2021 after the initial repayment holiday, the banking and finance industry has a critical role to play in helping businesses to manage and repay these debts that they have, in some cases, had little choice to take on during the Covid-19 pandemic.

Lenders face a number of challenges in doing so. Nonetheless, they are committed to providing the support required to those businesses facing financial difficulty and where possible to enable them to recover and achieve sustainable economic growth

It is estimated that 70 per cent of Bounce Bank Loans have been provided to businesses that had no previous debt with their lender, and consequently little experience of managing debt. Lenders are facing the communication and logistical challenges of offering Pay As You Grow (PAYG) options to Bounce bank Loan customers. They are alive to the need to have in place the right internal processes, and the trained expert resources, to cope with potentially significant volumes of customers under financial stress. There are regulatory and stakeholder expectations to meet. 

There is also the need to provide the finance necessary to drive the economic growth. We are hearing from members that demand is quite strong, and as businesses continue to recover and build for the future there could be significant future demand for funding in 2021. There will be sufficient supply of finance available for viable businesses and the industry is well placed to play a key role in the recovery. I expect challenger and non-bank lenders to play an important role in the provision of finance alongside the high street brands. Helping SMEs to navigate the SME financing landscape will be key.  

We will explore these themes during UK Finance's Commercial Finance Week (5-9 July 2021). This series of virtual events provides the opportunity for sector leaders and subject matter experts to debate and share knowledge on the issues most affecting commercial finance providers and their customers as the UK begins to emerge from the pandemic. Details and how to register can be found here.

Mike Conroy will be chairing two Financing the Economic Recovery sessions at our Commercial Finance Week; Risk Management at 1pm on 8 July, and Markets and Customers at 1pm on 9 July.

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