Sunday, 22 July 2018

Information and commentary for the small business banking industry

How the Brexit vote could impact small business lending in the U.S.

30 Jun

We are in volatile times. When international markets are hit by major economic events, historically financial institutions in the U.S get more risk averse. Since banks tend to be conservative, we’d be forgiven for expecting a huge pull-back on small business lending as a result of the recent decision for Britain to pull out of the EU. After all, any exporting U.S business could be exposed to the effects of the financial situation of their British trading partners. Then there is the obvious trickle down effect to all the businesses they deal with locally. Combined with the upcoming election, end result…you’d expect banks to tread a bit more carefully until the dust settles.

Rohit Arora, a contributor at writes about how the Brexit result could affect small business lending.  He talks about how small business lending approvals in the US have risen from one in ten approved in 2011 to one in five in 2014. However, this is not necessarily because banks have been relaxing their lending rules but is more about how underwriting is now more controlled by big data analytics. This should buffer any impact on lending in the short term and enable banks (and small businesses) to ride a smoother wave .

Take a look around your bank since the referendum – have there been any major changes as a result? Changes that could affect your small business customers? If it’s been decided that lending will be curtailed while the dust settles, it’s a good idea to communicate this to your small business customers. If not, it’s still worth educating them so they remain aware of how Brexit could affect their business.

Read the full article at:

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