Can FinTechs save the UK economy by funding small businesses?

TFT Webinar Review

In this 45-minute webinar, CEOs from leading FinTech companies shared their perspectives on how they could help small businesses stricken by the coronavirus lockdown.

Written by Claire Woffenden April 9, 2020

To help small businesses in the UK get better access to coronavirus loans, The FinTech Times brought together an expert panel for a compelling webinar on 8 April 2020.

The webinar covered the hot topic in the business world – the Coronavirus Business Interruption Loan Scheme (CBILS), which was set up by the UK government to provide financial support to smaller businesses (SMEs) across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

Concerns around the CBILS have focused on how the banking sector, plagued with legacy technologies, appeared ill-prepared to deal with the deluge of requests triggered by the scheme, and that the wider FinTech lending market had been excluded.

The online session was hosted by Mark Walker , Editorial Director at The FinTech Times, with a panel that featured:

  • Katrin Herrling, CEO and Co-Founder at FUNDING XCHANGE
  • Simon Cureton, Chief Executive Officer at Funding Options
  • John Davies, Chairman JLG Group PLC & Chairman at The Association of Alternative Business Finance

Points raised in the webinar discussion, hosted on Zoom, included the key ways these FinTech leaders believed the CBILS should be improved:

  • The scheme is modelled on a previous guarantee scheme [scheme] that was for larger lending and should be made more suitable for small levels of lending.
  • Current lenders are relying on cumbersome, non-digital processes [such as call centres where people are displaced] to try and process loans which is reducing effectiveness and leading to huge backlogs.
  • The CBILS is holding back many lenders from making positive lending decisions because of the residual risk exposure that they have.
  • Smaller businesses are seriously struggling to find access to finance and those that are in dire need of finance aren’t able to get commercial solutions.
  • 20% of businesses are expected to run out of cash in April, yet 70% of funding requests from businesses that have been turned down by banks are for less than £15,000.
  • There is too much miscommunication and misunderstanding of what is available under the CBILS.
  • Only a quarter of the accredited lenders in the scheme will have the liquidity and lending capabilities to make loans.
  • The CBILS has excluded the alternative lenders to the detriment of the economy and there should be a fast-track approval system for FinTech lenders, especially those that can help at scale.

The panel also discussed how FinTechs would be able to help:

  • FinTechs can collaborate and knowledge share to protect businesses and put sensible digital solutions in place that deliver speedier access to funding, using existing digital technology to cover traditionally offline processes.
  • FinTech aggregators and their partners have the experience of dealing with small businesses and can have a significant role to play in distributing funds to SMEs quickly.
  • The FinTech community should be involved in future discussions with the government and banks about lending to small businesses.
  • The FinTech community will be transparent and ensure businesses are treated fairly.

Date Issued April 2020.

Follow @justcashflowuk on Twitter for more like this.

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