A new Forbes article by Elena Ionenko, Head of Business Development at TurnKey Lender:
It’s not clear whether Congress will trigger an additional round of stimulus to counter the economic effects of the novel coronavirus pandemic; stimulus that has included government-guaranteed lending to businesses. What is clear, according to definitive new findings, is that the US economy was already in recession a month before a contentious and patchwork approach to “social distancing” got going in March.
As a result, lenders must reconsider how they assess business-loan applicants’ ability to honor the terms of the loan.
Another thing that seems likely is that businesses of all sizes in every state, district, and territory will be looking for loans before and after the stimulus spigot is finally wrenched shut. Many of these enterprises will be seeking help to get them through a recession exacerbated by:
● A contagion that may not have run its course
● The need for ongoing social-distancing measures that can impede business recovery, such as less restaurant seating, and expensive new workplace configurations
● Truncated consumer spending and other recession-related woes
● The usual uncertainty that takes hold in presidential election years
In this environment, many lenders will be making credit decisions based on traditional inputs that aren’t adequate to these times. In a macro view, applying old-school analysis to new market conditions could curtail lending and stall economic activity. For lenders, it could mean losing out on opportunities to make well-performing loans.
Read the full article on Forbes: How To Approach Business Creditworthiness Assessment During A Crisis-Fueled Recession