With each day bringing a new headline on the impact of the corona-virus pandemic, the uncertainty is disrupting individuals and businesses alike.

I am a firm believer in taking each day as it comes and, while we all know there will be some areas of big change, I also think one can run the risk of talking and speculating to create a self-fulfilling prophecy.

It is impossible to predict how widely the economy will be affected in the long term; however, we know the commercial sector will be an environment of swift change over the coming days, weeks and months.

Some of the largest countries are indicating how this pandemic will affect their economy. Day by day, we see figures showing GDP taking a hit, and even the strongest economies are set for a sharp contraction.

Support plans

Meanwhile, the UK government is working tirelessly to provide support plans for the nation; offering up to 80 per cent of income even when businesses are closed, including some assistance for the self-employed. It seems each day brings a little hope that the impact on businesses and individuals will be manageable, as well as on those needing to lend or with existing borrowing – albeit rate changes and increased caution around the lending risk will still be high on the agenda.

This is not a liquidity crisis like the crash of 2008, but the fallout here is diverse and consequences far-reaching. My over-riding view is that lenders must lend, the world must go around; but there are more practical and hypothetical issues than we have ever seen. The biggest sectors hit will be the hardest to help, unfortunately, with travel, leisure and events experiencing reduced lending, including where they are the underlying tenant.

What are we seeing already? It varies. However, there is an increase in lenders taking extra precautions. We are having to respond to the daily changes, keep an eye on the market and monitor the lending available to enable us to react to support our customers.

We are seeing changes to LTVs from those that were at the top end on certain products, and we expect underwriting to become a bit different with lenders paying attention to the stability of income, which is, of course, a challenge when there are so many unknowns.

Inevitable response

With such uncertainties, the pausing of lending was to be expected.  Strong businesses have paused funding in certain areas; some with issues in their diversification of funding and others being forced to pause for breath due to the practical issue of no valuations being possible.

All in the industry must work together. We must both support each other and support the lenders while they make difficult decisions in the short term that hopefully will allow them to lend in the long term.

Lucy Barrett, managing director, vantage Finance