The coronavirus pandemic sparked a rush of business for lending platform Loanboox, then CEO Stefan Muehlemann fell sick with COVID-19.
While in lock-down, Loanboox CEO Stefan Muehlemann frequently spent hours on the phone. It wasn't about business: friends were calling to ask how he was coping after falling ill with coronavirus.
After he tested positive for the novel virus last month, Muehlemann and his family headed for quarantine, which he described to finews.com as «one of the most tiresome experiences with illness ever.»
«My immune system overreacted, I had allergy-like symptoms at the start,» he said. «Then came ten days of painful headache and fever.» His symptoms worsened from there to include shortness of breath.
Illness Vs. Rude Health
Fortunately, Muehlemann didn't require hospitalization, but he still feels the aftereffects. «At times it feels like I have a brick lodged on my chest,» he said.
His illness coincided with a period of rude health for Loanboox. The four-year-old fintech sent its staff home even before Switzerland ordered self-isolation; no one at Loanboox showed symptoms of the virus at the time.
Surging Demand
As the pandemic spread in Europe, «demand for debt surged – the requested volume doubled on the year in March, and 180 percent more transactions were concluded on our platform,» Muehlemann said.
Loanboox runs a platform for borrowers. The lenders typically are institutional investors. The transactions tend to be markedly cheaper compared with the services of traditional brokers or banks – but to make the business worthwhile, the platform providers need to generate high volumes instead.
Corporates Tap Liquidity
The start-up, which expanded to Germany in 2017, placed 15 billion Swiss francs ($15.6 billion) via its platform last year. Companies are especially active amid the crisis, Muehlemann noted: corporates are tapping any possible sources of liquidity – they make for roughly 10 percent of total Loanboox volume.
«Because our platform is fully digital, the corona crisis helped us enormously,» he said. Public sector borrowers can launch requests while working from home – while according to Muehlemann traditional brokers are still frequently phone- or even paper-based.
Higher Public Debt
He expects public sector bodies to keep driving demand – since tax shortfalls will exacerbate deficits. By contrast, potential lenders are turning more cautious. Though still active, they prefer debt issued by higher-margin industries. «In fact, rates on public sector borrowing are up by as much as 0.5 percent and would be attractive,» Muehlemann notes.
The start-up hasn't had to avail short-time working schemes or lay off staff, and its financing is secure, Muehlemann said. A bitter note for Loanboox is that it wasn't part of a more than $40 billion government bazooka for small business. «We offered our platform for granting emergency loans, but the government opted for banks as its primary channel,» Muehlemann said.
