Global Online Financing Platform for SMBs Market 2016-2020
About Online Financing Platform
Online financing is a method of debt financing where different individuals can lend and borrow money using an online platform. Such systems eliminate any involvement of middlemen or banking institutions. The loans provided by the lender help the lender to generate income in the form of interest. On the other hand, the borrowers have easy access to financing, which might be difficult for them to procure if they approach a standard financial intermediary. The amount of interest charged on the loans is comparatively lower than traditional prime loans, which are offered to compensate lenders for bearing the risk of non-payment from the borrowers. Investors fund only a portion of the loan and spread the amount of the loan across many buyers. The investors receive steady, attractive returns while spreading the risk across multiple borrowers. For example, the largest lending platform is in the US; Lending Club went public in December 2014 with a successful Initial Public Offering (IPO).
Technavio’s analysts forecast the global online financing platform for SMBs market to grow at a CAGR of 53.06% during the period 2016-2020.
Covered in this report
The report covers the present scenario and the growth prospects of the global online financing platform for SMBs market for 2016-2020. To calculate the market size, the report considers the revenue generated from the online financing platform for SMBs in the Americas, APAC, and EMEA.
The market is divided into the following segments based on geography:
Technavio Announces the Publication of its Research Report – Global Online Financing Platform for SMBs Market 2016-2020
Technavio recognizes the following companies as the key players in the global online financing platform for smbs market: CircleBack Lending, Kabbage, Lending Club, Ondeck, Peerform, and Prosper.
Other prominent vendors in the market are: Borrowers First, Daric, Funding Circle, Pave, and SoFi.
Commenting on the report, an analyst from Technavio’s team said: “One of latest trends in the market is rise in growth of SMBs financing. We expect more online lending and crowd funding with government support, which would help investors to make small investments in private companies. The European Commission is evaluating soft-law measures that could help promote online lending and crowdfunding across Europe. The commission is assessing the means to align government funding with online lending and crowdfunding platforms in addition to the investment opportunities during the forecast period. The main driving factors are regulatory changes that include the elimination of capital gains tax and the relaxation of rules that limit foreign investments. This has helped in more capital inflows for the start-up businesses. The companies have been in an advantageous position; wherein they are able to meet the day to day operational expenses especially during the starting phase.”
According to the report, one of the primary drivers in the market is increase in lending of SMBs. In the aftermath of the financial crisis, banking, and financial institutions are trying to deleverage the off-balance sheet items to meet the penal capital adequacy requirements. This has led to the reduction of loan finance for SMBs and individual borrowers as they are considered to be risky. The emerging models of the online lending sector (that includes an online balance sheet, marketplaces, and P2P platforms) has successfully filled a massive unmet need. The innovations in technology have expanded the ease of access to working capital for SMBs. The boundaries of technological services are sometimes fluid, but there are five key products required for funding small businesses. These include marketplace lending, merchant and e-commerce finance, invoice financing, supply chain financing, and trade financing. These trends create an impression that technology may create more such products in the future.
Further, the report states that one major challenge in the market is increasing governing and regulatory risks. If we look at the present market, the online lending platforms are subject to regulations that are for certain consumer banking and other financial institutions. The consumer credit that is provided by the banking and financial institutions are subjected to a number of laws. These laws regulate the credit life-cycle that includes underwriting, payment terms, agreements and disclosures, advertisements and solicitations, and debt collection practices. There are also other laws like privacy and data security and anti-money laundering laws that regulate the relationship between the customers or borrowers and the banking and financial institutions. Due to complex regulations, non-bank creditors are forging partnerships with the banking and financial institutions as the banks have powers to regulate interest rates and host compliance infrastructure. However, bank partnerships with non-bank consumer lenders have drawn scrutiny from banking regulators on their lending practices and compliance with laws.
CircleBack Lending, Kabbage, Lending Club, Ondeck, Peerform, Prosper, Borrowers First, Daric, Funding Circle, Pave, SoFi.