The impact of SVB on the lending

It has been a challenging task to keep up with the rapid succession of events that have occurred since the failure of SVB earlier this month. Many entrepreneurs and SMEs have been left wondering how such a crisis could affect their ability to secure a loan or credit in the future. A recent infographic from the Wall Street Journal, based on Federal Reserve Bank data, provides an answer to this crucial question.

The chart confirms that domestically chartered banks, ranked below the top 25 largest banks, provide the majority of loans to SMEs in the United States. This group currently holds a 38% market share of all outstanding loans in the United States, with a 67% market share of commercial real estate loans and nearly half of all consumer loans in the United States in their portfolios.

It is uncertain what the impact of the SVB collapse will be on the overall credit appetite of the American banking industry over the next few months and beyond. It is highly probable that all credit institutions will tighten credit standards for all borrowers, including SMEs. With SMEs accounting for 99% of all business establishments in the United States, the effects of an event in Silicon Valley could ripple throughout the entire country and potentially culminating on slowing down the overall economy.

Here's a thought that's been on my mind - could this negativism around financial institutions be an opportunity for invoice financing industry in the United States? Will SMEs turn to the factoring industry for working capital if they can't get a new loan, an increase in a current credit facility, or a renewal?

I believe that this could be a great opportunity for the industry to step up and serve SMEs. With technology being such a major force in the financial sector, we can leverage cutting-edge solutions to provide working capital for payroll, expansion, purchasing inventory and raw materials, and smoothing out cash flow. It's a chance to serve the true backbone of the American economy.

However, I have to admit, there is an optimistic side to me that tells me the windfall we hope for may not materialize. I mean, before the SVB failure, SMEs were already retrenching and not seeking any form of capital for their businesses. So it's possible that the current banking events may further dampen SMEs' enthusiasm to borrow money from any source.

It’s impossible to anticipate with certainty what the future holds. Let's keep a close eye on how things unfold over the next several months and beyond. As always, we must stay innovative and be ready to adapt to changing times.