The COVID-19 pandemic has shaken all industries worldwide at an unprecedented level. From the medical industry to the financial industry, no field has been exempt from the pandemic and its consequences. These have included extensive lockdowns, stores going out of business, and thousands of employees being laid off. Storefront lenders have also seen changes in their business dynamics, which have fluctuated during 2020. But how has the pandemic affected these businesses directly?
Has COVID-19 affected Storefront Lending
The COVID-19 pandemic has affected storefront lending in different ways and at different times. At the very beginning, the pandemic represented a huge hit to these businesses, as many of them saw requests for loans decrease. This is mainly because many businesses planning to get a loan to invest in a new project or expansion had to halt their plans. At the same time, the uncertainty about the future stopped individuals from entering additional debts at the very beginning of the year.
In addition, lockdown restrictions were universally bad for storefront lenders as customers couldn’t go to their place of business. This meant that many of these lenders had to look for ways to bring their businesses to the digital platform. For lenders that did this, the change represented a hefty investment, but one that would prove to be worthwhile.
As the pandemic advanced, customers started looking for outlets like Storefront Lender LLC, among others. Their goal was to find out options that would allow them to keep their families or businesses afloat. In many of these cases, these people had lost their jobs or had businesses that were being largely impacted by local, regional, and national restrictions. Therefore, lenders who had taken the precaution or who decided quickly that it was time to invest in their online business benefited from this influx in customers.
At the same time, there are new risks to be considered. If these customers are unemployed, when could they be expected to pay back their loans? Fortunately, many countries started to reopen their activities by August and September, something that allowed many people to go back to their jobs. In addition, small businesses that directly catered to needs that had risen from the pandemic started to see good returns, which allowed them to start paying their debts.
What to Expect from Storefront Lenders in Terms of Pandemic
As developments regarding COVID-19 continue to take place, changes will also be seen in how storefront lenders conduct their business. A change that could affect them is the fact that numerous banks worldwide have relaxed their loan requisites. This could lead to greater flexibility across all storefront lenders to maintain a competitive profile.
In addition, digitization is expected to continue growing. Lenders that have not adopted this trend yet are likely to do so sooner rather than later. However, this doesn’t mean storefront lenders will disappear. It is expected that a hybrid model will emerge, allowing people to have more options when it comes to choosing how to proceed with their loan. Also, if lockdown rules are brought back, the lender will have the ability to pivot and adapt more easily.
As vaccines continue to be approved and deployed worldwide, a surge in the economy is to be expected. Once people begin to trust the future more, investments will be made once again. This could lead to another surge in storefront lending for people wanting to invest in their small businesses. A different cause that could lead to the same result is people asking for a loan to pay debts they might have acquired during the pandemic. This would allow them a respite while they put their finances in order during 2021.
While there’s still much to be learned about COVID-19 and the future of storefront lenders, it is understood that what appeared to be a catastrophic event might have not been that bad for these businesses. Those that managed to weather the first consequences of the pandemic and lockdown restrictions might have benefited from increased demand for loans. In addition, the acceleration of the adoption of digital platforms could prove a great advantage in the future. Lastly, the fast development of vaccines could lead to a more financially stable 2021, which would have positive effects across all businesses, including storefront lenders.
You may also like: The Wider Impact of COVID-19 on Traditional Business Lending
Image Source: Unsplash.com