Brokers fear Covid loans will lead to drop in future SME lending

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Commercial brokers have expressed concern that traditional loans to small and medium-sized enterprises (SMEs) may decline significantly due to the volume of emergency loans granted.

The Allica Bank survey of commercial mortgage brokers found that more than eight in ten brokers (82%) said they saw a reduction in the financing supply from commercial lenders, more than half (56%). ) calling this important.

Read more: FSB warns that one million SMEs have been excluded from support measures

The majority of commercial mortgage brokers surveyed believe that banks and non-bank lenders are unlikely to be able to meet the future needs of SMEs for a range of essential financial products in 2021.

93% of these brokers fear the future of commercial mortgages, 86% are worried about unsecured loans, and 81% are worried about secured loans.

Read more: SMEs set to end up in debt of £ 173,000 thanks to coronavirus loans

Additionally, nearly three-quarters (70%) of brokers said they believe SMEs are likely to be underserved by banks and non-bank lenders for asset financing.

Nick Baker, head of intermediaries at Allica Bank, said the expected drop in lending would severely hamper companies’ efforts to recover from the pandemic.

Red plus: Reimbursed covid support should be used to help struggling small businesses

“The government’s lending initiatives have been a lifeline, but they have also limited the capacity of many lenders,” he said.

“This means they are unable to meet the more ‘traditional’ financing needs of companies not looking to alleviate Covid, such as those looking to expand.

“Companies like this will be at the heart of the UK’s economic recovery, and we need to make sure they have access to adequate financing now to drive long-term growth.”

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