The global commercial lending market is estimated to be valued at $27,406.6 billion by 2028, surging from $9,712.8 billion in 2020, at a noteworthy CAGR of 14.4%.
Impact Analysis of COVID-19 on the Commercial Lending Market
Commercial Lending Markets have been impacted by the COVID-19 pandemic. Banks and other lenders have tightened up lending standards and are becoming more selective in the companies they choose to do business with. For example, it has increased awareness about safety precautions that need to be taken when doing business with certain types of lenders. Additionally, it may lead to an increase in demand for loans from companies that are traditionally difficult to get financing from.
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Global Commercial Lending Market Analysis
Entrepreneurs who run small businesses frequently lack the financial resources necessary for debt or equity financing. Start-up costs and risks are high because of this. Commercial lending, on the other hand, makes it possible to cover all start-up costs with a commercial loan. This also makes obtaining a large amount of funding much less intimidating for business owners who do not have extensive resources. Commercial lending also helps small businesses gain access to large sums of money by consolidating all of their financing into a single loan. As a result, the commercial lending market is greatly influenced by this.
The rise in non-performing assets (NPA), on the other hand, has slowed the market's expansion, particularly during the pandemic.
Technology in the commercial lending sector is advancing rapidly, and the internet lending industry has grown at an astronomical rate over the past few years, according to industry analysts. More people than ever before are applying for loans, whether for personal or business reasons. Artificial intelligence, blockchain, and machine learning are being used by online lenders to improve the customer experience and streamline the application process for commercial loans.
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Global Commercial Lending Market, Segmentation
The global commercial lending market is segmented based on type, organization size, providers, and region.
Type:
The type is further classified into secured and unsecured. The unsecured sub-segment is anticipated to grow at the fastest CAGR of 16.0% and account for $15,647.8 billion over the forecast period growing from $4,963.8 billion in 2020. For businesses that are looking to expand their operations, unsecured loans are becoming increasingly popular. In recent years, unsecured loans have surpassed all other forms of credit in terms of overall popularity. For all businesses, it is a solution where everyone benefits. The interest rates on secured loans are higher than those on unsecured loans, which are lower. In addition to large corporations, these loans are available to small and medium-sized enterprises (SMEs) with poor or no credit scores. As the economy is still in a state of flux, it is anticipated that the market for unsecured loans will boost in the near future.
Organization Size:
The organization size is further categorized into small & medium enterprises (SMEs) and large enterprises. The SMEs sub-segment is anticipated to grow at the fastest CAGR during the forecast period accounting for $13,148.4 billion growing at a CAGR 16.9% In the recent years, the number of small and medium-sized enterprises (SMEs) has increased significantly around the world. The primary factors that hinder the growth of these organizations are funding and initial investments. However, commercial lending has enabled these organizations to obtain funding and expand. The availability of unsecured loans as well as bank loans is helping to increase the number of start-up businesses as well as the number of existing medium-sized enterprises. Additionally, various types of benefits that are being provided by governments around the world is another important factor that has contributed to the growth of SMEs in recent years.
Providers:
On the basis of providers, the market is divided into banks and NBFC. The NBFC sub-segment is anticipated to grow at the fastest CAGR of 15.9% and is projected to reach $14,263.8 billion over the forecast period. In recent years, non-bank financial companies (NBFCs) have played a significant role in the growth of the commercial lending market. One advantage that non-bank financial companies (NBFCs) have over traditional banks is their ability to provide businesses with quick and easy loans. Despite the slowdown in the economy, non-banking financial companies (NBFCs) continue to be a significant force in the commercial lending market. The demand for credit from small and medium-sized businesses (SMEs) is increasing, driven primarily by a strong demand for working capital and other short-term requirements. Furthermore, non-bank financial companies (NBFCs) are increasingly offering credit products that are tailored to specific market segments, such as retail and agriculture, which are becoming increasingly popular among consumers.
Region:
The Asia-Pacific commercial lending market is anticipated to grow at the fastest CAGR of 16.5% and reach $7,081.9 billion by 2028. The presence of number of developing countries as well as technological developments taking place in this region is anticipated to boost the market growth in the near future.
Key Players in the Global Commercial Lending Market
Some of the leading global commercial lending market players are
- Merchant Capital
- American Express Company
- Fundbox
- Credit Suisse
- Funding Circle
- Goldman Sachs
- Kabbage
- Fundation Group LLC
- LoanBuilder
Porter’s Five Forces Analysis for the Global Commercial lending Market:
Bargaining Power of Suppliers: There are numerous players in the commercial lending market. Thus, the bargaining power suppliers is low.
Bargaining Power of Buyers: Buyers have little bargaining power because a large capital investment is required for establishing commercial lending. Thus, the bargaining power of the buyers is low.
Threat of New Entrants: The companies entering commercial lending market have to incur investment cost. Thus, the threat of the new entrants is moderate.
Threat of Substitutes: The availability of the alternatives for the commercial lending is very low. Thus, the threat of substitutes is low.
Competitive Rivalry in the Market: Since high number of players operating in commercial lending industry are concentrating on acquiring number of customer base, the competitive rivalry among industry leaders is extensive. Therefore, competitive rivalry in the market is high.
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