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Loan Approved Accepted Application Form Concept
October 19 2020

Lenders are returning to non-Covid finance

Marc Shoffman Industry News, News, Top 3 Bounce Back Loans, coronavirus business interruption loans, covid, FundingXchange

Lending activity unrelated to the Covid-19 pandemic is beginning to rise again, Funding Xchange claims.

The business finance aggregator’s latest small- and medium-sized enterprise (SME) Lending Monitor said almost 90 per cent of loan offers on its platform in the three months to October were not for bounce back loan (BBL) and coronavirus business interruption loan (CBIL) funding.

This compares with fewer than three quarters in June.

Its report suggests this has been driven by the schemes being used to refinance other debt which then creates pressure for lenders to provide new loans to generate income.

Read more: Funding Xchange names advisory board members ahead of new credit offering

“Confidence in performance of existing portfolios is enabling a tentative return of liquidity outside of the government schemes,” the report said.

“In September, we have seen a threefold increase in lenders providing funding outside of the government schemes, with the number of funders rapidly approaching a pre-crisis norm.”

Read more: Fintech leaders launch Fintech for All Charter

Funding Xchange also said it was seeing a return of lenders that had “sat out” during the coronavirus crisis.

“Having kept their powder dry, these lenders are now exploring market opportunities by focusing on businesses that were not eligible for the government support schemes as they performed well during the crisis,” Funding Xchange said.

The platform predicts further government intervention will be needed to support the economy.

“Interventions should build on and support the re-emergence of commercial solutions – ensuring that the finance sector has the opportunity to contribute to building back the economy,” Funding Xchange said.

“This will require targeted solutions supporting businesses that are unable to access commercial solutions.

“It requires engagement with the bank and non-bank sector to empower the finance sector to support UK businesses.”

Read more: Funding Xchange secures $10m in funding round

Innovate Finance boss urges government to use fintechs more in loan schemes Over £70,000 has been traded on Ablrate’s new loan exchange

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