The post-COVID lending boom

May 12, 2021 - 7 min read

A Post-COVID Lending Boom: The Grand Re-Opening

The past 12 months have been tumultuous, to say the least. And while a great wave of economic hope rests firmly on the shoulders of vaccination, we’re not quite out the woods yet. Yet as business leader, Mark Cuban says, “whenever there is change, and wherever there is uncertainty, there is opportunity.” For banks and lenders, now could be a really great time to seize that potential.

The COVID-19 lending boom picture

COVID-19 has affected every corner of the economy, including, of course, lenders of all sizes. Many over the past 12 months have dramatically reduced lending as a measure to protect against losses, with smaller players taking a bigger hit because they lack the luxury of big accounts to bolster books. 



Additionally, demand for credit from SMEs severely dropped as business plans were disrupted and enterprises struggled to support financial projections. Many borrowers were forced to re-evaluate business strategies, preferring to use government support programs (such as the furlough scheme) to meet liquidity needs versus taking on more debt. As a result, lending opportunities shrank, and businesses closed doors, some permanently. 

The grand re-opening lending boom

Now that the vaccination program is well and truly underway, the good news is that the next few months look much brighter for businesses. With over 1.5MM people in Norway vaccinated and 3.0MM people in Sweden as of the time of writing, the grand re-opening of the retail, travel, and entertainment industries is coming. Look to the U.S., and you can already see it happening; with over 25% of the country fully vaccinated, banks such as JP Morgan are starting to release reserves that have previously been held closely over the past year. U.S. consumers are “coiled, ready to go,” says JP Morgan CEO Jamie Dimon, with companies looking to expand by buying or starting new businesses. 

While many unknowns still surround the vaccination program, the likelihood is that this summer will see a colossal spending wave. This will significantly impact businesses, especially those who rely on in-person sales for all or part of their services. Fashion retail, for instance, decreased 33.7% from April 2020 versus 2019, but we can hope to see this number recover to pre-COVID levels as people start to increase purchases in the retail and service sectors. The aisles of shops will become busier, and business travel will resume (some flights report as much as 75% of revenue comes from business travel), while cafes will become alive again with the tinkle of coffee cups and cutlery. Businesses and restaurants will be ready to spread their shutters wide and welcome back customers with open arms after a very slow start to the year.

Getting ahead of the lending boom curve

This grand re-opening will not be slow. Aided by a long time of re-organizing, strategic thinking, and planning, businesses coming out of the woodwork will likely have a huge amount of work that needs addressing to get ready for the wave of customers, so growth is likely to ramp up quickly. Growth that requires financing. Plus, consumer behaviour research has shown that crises and changes in life circumstances often lead people to new purchasing patterns, with many consumers seeking out new products and brands. If ever there were a time to focus on growing a business through marketing and launching new products, now would be a good time. 

As businesses welcome the flood of returning customers, it is also a great time for lenders to ramp things up and capitalise on this opportunity. A wave of returning customers will bring an associated spike in business lending so SME lenders would be wise to position themselves to be ready. This could mean updating systems, digitizing platforms, or streamlining onboarding processes. Or indeed a whole new product launch; now is a great time to get that started to be ready for the surge in customer demand. Digitalized systems in particular can be helpful for lenders so they can focus more of their time on customer service, knowing the back-end processing will be happening seamlessly in the background. The boom in post-COVID spending provides players in the SME lending community a great opportunity to help get small businesses back on track, and quickly. 

The large proportion of unemployed also brings an additional opportunity for lenders in the form of new businesses. In Sweden, current unemployment stands at 8.9% and many of these will likely turn to entrepreneurship, hungry for meaningful work within their community. Aided by falling rents, this could mean new shops and restaurants opening and thus a whole other group of people looking to lenders for credit. 

A wave of opportunity

We’re all looking forward to connecting with friends, family, and colleagues face-to-face. The “when?” is less certain, but we all know it’s coming. Businesses know it too, and many are beavering away to set the stage and be ready to welcome old and new customers back. 

So, for lenders, now is a great time to capitalize on the inevitable spending wave coming later this year. Whether that’s updating systems, launching a new product or optimising processes, lenders have a great opportunity to be ready to fulfil the credit needs of businesses as we ride the new wave of hope in 2021.


Businesses will start to boom again, as people come out of their Covid-19 bubbles. Especially for SME’s that have been badly affected by the pandemic. So, this is the time to really ramp things up and optimise this opportunity for SME lending.


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