The pandemic created a onset of difficulties for the businesses over the last couple of months , especially for the Small and Medium Enterprises as they were forced to close their businesses in order to help contain the spread of the virus and for the national security. The British Business Bank also released a report which revealed that 45 per cent of the SMEs were seeking financial support in 2020 and it had risen from just 13 per cent in 2019 showed just how challenging it must have been for the small and medium enterprises. External finances has always been vital for the small and medium enterprises to thrive over the last couple of months, mainly with the Government backed loans. As many smaller companies struggled to maintain their business in many sectors as a result of the pandemic and they are unable to continue with their operations or to have a significant changes being made to stay available for business. Having little to no money coming in and the expenses anyway going out, the situation created a miserable state of a very number of the smaller companies. Even after having many reasons to be optimistic about the situation while looking the future ahead to recovery, it was anyway a challenging few months and there was nothing which could be done to alter the further hindrances.
It may be very informal to analyze that why so many of the companies sought the financial help in the year 2020 with gross bank lending, which excluded the over drafts, being 80 per cent higher than 2019 and it reached £104 billion, all these driven by the Government schemes. This alone was not sufficient for the SMEs in many cases and the SMEs had to turn to alternative sources, which was opposed by the traditional lenders and it had a potential of becoming the new trend moving forward. Fintech companies have hugely become a popular form of funding source for many of the SMEs over the last year and this can be become the mainstream financial solution, especially with the constant change in the market and in the post pandemic marketplace. Chirag Shas, Chief executive officer of Nucleus Commercial Finance said that they firmly believe that Fintech lenders are the best positioned support system in the industry to support the SMEs and all credits to the ability to design the flexible products, powered by the new technology. Future innovation will reinforce that Fintechs can no longer be considered an alternative, he believes that they are the true lenders.
The future demand for the funding in the months and years to come is set to be higher because of the businesses looking to recover, adapt and grow in this post pandemic and post Brexit market environment. Fintechs are able to provide the financial lending to the SMEs with the fast access to funds and this is sure to bring them to a much higher position than the traditional lenders. Innovation, flexibility and technology are to play a key role in the recovery and the Fintechs will be leading this journey.