P2P Lender Linked Finance Reports Business Optimism is Back

Peer to peer SME lender Linked Finance says that business optimism is back to pre-pandemic levels even while the Delta/Mu COVID variants capture headlines.

Linked Finance, operating in Ireland, reports in its inaugural Linked Finance SME Confidence Index, referencing research conducted by Behaviours & Attitudes, was at 65.6 in Q2 (scored out of 100), surging from a level of 48.7 a year ago, and above the pre-pandemic level of 65.2 in Q4 2019.

Niall O’Grady, CEO of Linked Finance, commented on the data:

“It is very encouraging that Irish SMEs are recovering from the huge challenges they have faced through the pandemic. Not only has business optimism rebounded to pre-pandemic levels, but the future outlook is for this trend to strengthen. We are, however, still seeing pockets of the economy that are slower to rebound, and it’s clear that the pace of recovery is lagging for domestic market focussed micro-businesses. The inflationary trend is another sign of the economy heating up, although now more than ever businesses need to be careful to maintain competitiveness, particularly where reliant on export markets. Businesses are giving the Government a thumbs up for the Covid supports received, even if it’s clear that sectors like travel, hospitality and live entertainment still bear a heavy burden due to uncertainty regarding their markets.”

O’Grady added that its new SME Confidence Index will provide a quarterly barometer of sentiment while noting that in January Linked Finance became the first non-bank lender to be approved under the Government Covid-19 credit guarantee scheme.

Linked Finance says that 65% of respondents to the research are reporting profits the same or better than a year ago, compared to 30% in Q2 2020. Additionally, 76% of SMEs are expecting trading activity next quarter to be the same or better, compared to just 46% with this view a year ago.

Job creation expectations have also moved into net positive territory, improving from last year when 33% of companies expected to cut jobs and just 3% expected to increase headcount.

About two-thirds of respondents say they are satisfied with the Government’s efforts to help small businesses cope with the impact of COVID 19.

Linked Finance notes that  over €31 billion in expenditure to support the economy via the Pandemic Unemployment Payment (PUP) and the COVID-19 Credit Guarantee Scheme has been a success, while some sectors remain challenged (like travel related).

There are indications of inflation with 23% of companies expecting to charge higher prices in future, up from 6% a year ago.

Very small firms, or micro-enterprises with 1 to 3 employees, continue to struggle, though.

For its business, Linked Finance says lending is on track for a strong year following a record monthly high of €5.5 million in loans for July.

Year to date Linked Finance has issued over €21.6 million in loans, compared to €19.9 million for the whole of 2020, with strong growth in lending across all sectors, in particular among those reopening their operations following the easing of Covid restrictions, such as retail (+39%), construction (+62%) and transport & logistics (+67%).

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