According to CPA Practice Advisor, in a time of crisis, over 69% of businesses struggle with cash flow issues and half do not take measures to prepare for a wide-scale economic downturn.
OroCommerce quoted Boss Insights on the impact in lending: “Lending is based on a model that’s hundreds of years old, a time when businesses had buildings or equipment as collateral”, admits Keren Moynihan of Boss Insights, a fintech startup. In today’s service economy, most companies aren’t in that position and as a result the approval rate is very low – 28% before this crisis.
“Since COVID, the world has gone digital overnight”, continues Moynihan. Lenders are faced with a surge in applications which they are not able to process in a 100% digital and risk-averse environment. Although some applications can see delays in processing, “we see many lenders extending existing loans with the SMB businesses they already support.”