The UK’s largest high street lenders are continuing their restrictions to offer further loans, following the COVID-19 outbreak.Some of the UK’s most well-known lenders including Amigo Loans confirmed that they were not offering new loans during the current lockdown. Although restrictions are easing for travel and work, borrowers face the same challenge to borrow money from high street lenders.The main issue is surrounding income and affordability,” explains financial consultant, Daniel Tannenbaum. “Private lenders need to confirm the income of every new applicant and ensure that they can afford repayments. With coronavirus, a number of people have been furloughed or let off and this raises a lot of uncertainty over their ability to afford future payments, whether it is 3,6 or 12 months’ time.”News of the coronavirus outbreak saw a rise of those applying for Universal Credit, up by 950,000 people. For those struggling businesses, the government has set up a scheme for Business Interruption Loans, offering finance of up to £5 million for any businesses directly impacted by the coronavirus. Almost all of the UK’s banks and larger financial institutions signed up to offer to fund their customers.Those looking for short term finance during the outbreak have been able to access credit cards as per usual, and also receive a three-month payment holiday and free overdraft of up to £500, subject to status.Similar measures have been introduced by the UK government to ease financial pressures on households, including three-month mortgage holidays and last week, the introduction of one-month payment holidays for car finance and payday loans.“Those in desperate need to borrow money can look at 0% credit cards or 0% overdraft facilities offered by their banks in these unprecedented times,” Tannenbaum continues. “Security and asset-backed lending do stand a higher chance of approval, but again, this must be backed up by a regular income for businesses and individuals.”The challenge presented for lenders is when will it be the right time to start lending again. Like any fledgling business, lenders have funding targets and growth requirements, and analyzing risk will be key to determine who can afford to repay, and who cannot.A spokesperson from AI solutions company Optalitix commented: "Banks and lenders need to monitor their underwriting processes more closely than ever during coronavirus. With income unstable for many, it is important to find patterns and characteristics of potentially good customers and scale this across their procedures, and it creates a business case for things like AI and machine learning to understand these patterns better."“Lenders should look also read and take advice from their regulator or governing body; to make sure they comply with ever-changing regulations and circumstances surrounding COVID-19.”
Private lenders restrict borrowing until further notice
The UK’s largest high street lenders are continuing their restrictions to offer further loans, following the COVID-19 outbreak.
