Extending your reach Esme Loans: An allied recovery

An allied recovery

What now for unsecured lending? Shyam Raval Broker Manager Esme Loans “ Brokers allow lenders that are technologically equipped to be nimble and avoid wholesale

COVID-19 and the associated economic lockdown has sector exclusions of the past impacted us all and has radically affected the business landscape. The true scale of the shock and its effects continue to be played out but already GDP has fallen a further 20% in Q2, there are 730,000 fewer people on payrolls since the lockdown started with regional restrictions affecting consumer credit teams will be keen to see applicants who can afford to service and business confidence making it complicated to forecast new money in addition to any COVID debt they may have taken. the recovery. Esme have had the benefit of leveraging our technology to enable data sources in addition to credit bureau data. Amongst several delivery of a dynamic risk appetite that can rapidly be flexed to adapt experimental data projects at Esme, we’re using alternative data to market opportunities and shocks. As such, despite decreased sources such as localised behavioural, demographic and footfall demand, we were able to continue to lend under a revised credit data in retail segments to support the analysis of an applicant’s appetite throughout the crisis with more cautious requirement recovery potential. on affordability and most at-risk sectors. We’re also starting to see The government will eventually cease to subsidise lending. It As the recovery will not be uniform, lenders are unlikely to switch Underwriting models will be enhanced using non-traditional pockets of demands forming across several sectors and have been The sheer number of businesses that have borrowed under the developing this capability further to best respond to this need as government schemes are also likely to prompt a revaluation of the economy opens up. loan product features. Lenders may launch multiple risk appetites per product with features (such as no PG and varying capital What next? repayment options) dependent on the location, sector and recovery remains to be seen how much liquidity for new money will be Brokers are a key ally for lenders as they re-enter the market. available without guarantees at a time where BBL and CBIL schemes Targeted distribution of regional and dynamic appetites is likely could begin to default without further forbearance. For some the unit to drive a far higher return than localised direct marketing that economics won’t work which could depress competition as well as may quickly become out of date. Brokers allow lenders that are the variety of finance options available to customers. technologically equipped to be nimble and avoid wholesale sector demonstrated by the applicant. exclusions of the past. back to the exact products and appetite parameters they offered The market may be distorted for some time to come and challenges pre-CBILS and BBLS. Businesses that can demonstrate they have of a no deal Brexit could complicate things further, but SMEs are traded out and withstood the shock will be most attractive, whilst resilient and innovative. Esme stands ready to fund the recovery.