The UK economy is likely to be characterised by a K-shaped recovery coming out of the pandemic, with some businesses emerging from Covid-19 unscathed while others will struggle, according to Katrin Herrling, CEO and co-founder of SME lending marketplace fintech Funding Xchange.
Managing the diverse funding needs of SMEs – some of which will accelerate through the recovery while others will need support – will pose one of the biggest challenges for the Funding Xchange, which houses 70+ lenders and lessors, said Herrling, who added that funders are still also trying to gauge their exposure in the emerging environment.
Herrling made the comments during a 30-minute interview with Lindsay Town, the CEO of IAA-Advisory, as part of a series of ‘fireside chats’ with UK leasing executives, to be streamed on 23 September at 1pm.
Herrling was also upbeat about the signs for a UK pandemic bounceback, saying many key indicators were now trending in a positive direction. “Today we’re seeing 60 per cent of businesses reporting that they are doing better than pre-pandemic,” compared to 20 per cent a year ago, she said.
However, what is of concern, cautioned Herrling, are the incredibly high levels of debt being accrued by UK SMEs, “which in many cases has seen years of revenue replaced with debt,” under a UK government policy that will see SMEs emerge from the pandemic nursing weak balance sheets.
The UK government’s “unique approach” to laden SMEs with debt stands in contrast to the US and European governments that sought to fund SMEs largely through a system of business grants, noted Herrling.
“We are now entering a period of learning how UK small businesses cope with coming out of the crisis,” she added.
“Based on what we know, [the Covid crisis] has been a significant challenge for a huge segment of the UK business sector that has had very low profitability prior to the crisis, and there is no suggestion yet that this profitability will be exceeded after the pandemic is over, in fact, we are seeing that many businesses that are reopening are finding their costs coming back quite quickly, but their revenue is not returning quite as quickly,” she said.
Herrling also explained her leadership style and what she looks for when recruiting her workforce, among other topics.
The pre-recorded chat is the eighth in a series of interviews that Lindsay Town has hosted this year sponsored by LTi Technology Solutions, a US-based global provider of in-the-cloud asset finance technology.
Robert Taylor, UK country manager for LTi Technology Solutions, said: “Although LTi is a sponsor of this event, we wanted to hand the interviewing to a seasoned industry professional, so we’re proud to say that Lindsay Town, with at least 45-years’ experience under his belt in various leadership roles, agreed to do this for us.
“We know he’ll generate good debate and get the best out of the captains of industry we’ve lined up in the weeks ahead.”
LTi Leasing Leaders Series
The ‘LTiConnections: Leasing Leader Series’ interviews are free to watch and will be followed by a live Q&A session with the interview guest and interviewer, alongside LTi’s Taylor.
Registration is required.
Taylor said: “Our series of talks have been structured to tackle the most pressing and current topics that our industry is facing today. The idea is to examine the key changes the industry has seen in the last year and to consider the challenges ahead.
“We want to appeal to new recruits in asset finance as well as explore the essence of being a leader in this industry,” said Taylor.
Click HERE to register for the Zoom Webinar.