Anticipating and Preparing Ahead for Financial Industry Trends
15 December 2020
Looking back on 2020
The SME loan support programmes launched in March 2020 by Her Majesty’s Treasury (HMT) and the British Business Bank have resulted in a dramatic increase in SME lending. To mid-November 2020, c.£42bn of Bounce Back Loans have been advanced, in addition to c.£23bn across both the Coronavirus Business Interruption Loan Scheme (CBILs) programme.
Year on year percentage change of lending to SMEs
Whilst the majority of the Bounce Back Loan programme has been distributed by the large banks, the challenger bank and non-bank SME lending market has also been distorted by the pandemic.
There are c.110 accredited CBILS lenders, all of whom are offering a variant of the same product, supported by the British Business Bank. However, many accredited lenders have adopted a policy of only supporting existing customers and effectively ceasing non-CBILS lending.
The combination of these factors, coupled with the continued uncertainty of temporary lockdown measures means that many SMEs will continue to struggle to secure financing until after the CBILS scheme ends.
Looking ahead to 2021
The lending and broking businesses are well positioned for 2021. Looking ahead, we see three core areas of opportunity:
The shift to electric vehicles
Being able to access multiple brands, offering lease-based products and delivering outstanding customer service have enabled Synergy (our vehicle leasing business) to trade well since the first lockdown ended in June.
Looking forward, Synergy is well placed to support consumers and businesses shift from petrol/ diesel vehicles to electric vehicles. Buoyed by the generous tax incentives for businesses, we are already seeing a large number of commercial customers switch to electric.
Enabling SMEs to reposition to areas of opportunity
Many SMEs will enter 2021 with uncomfortably high levels of debt, which may restrict their ability to manoeuvre and capture opportunities. We anticipate that SMEs demand for finance will likely occur across three themes:
Restructuring and deleveraging
Benefiting from opportunities as part of regional levelling up through investment in infrastructure and the Green Industrial Revolution
Financing post Brexit trade
Newable Finance, aided by its regional structure, is well placed to support businesses through 2021 and beyond.
Stamp duty holiday and repurposing of commercial property
Newable Finance places a large amount of property-backed finance and is expecting 2021 to be driven by two main themes:
Firstly, we are expecting a busy first quarter of 2021 as businesses and individuals look to make the most of the Stamp Duty holiday, which ends in March 2021.
Secondly, we are expecting to support many property investors and businesses repurpose commercial properties as landlords look to reposition commercial real estate assets to align with new and emerging work patterns.