The Global Micro Lending Market size is expected to reach $65.4 billion by 2028, rising at a market growth of 12.8% CAGR during the forecast period.
The process of giving small loans, or microloans, to proprietors of small businesses is known as micro lending. These small business owners, many of whom are located in developing nations, may not have access to conventional banking services or institutions. Instead, to meet their financial needs, these small enterprises use unconventional loan service channels.
These loans are given by lenders to companies and people to help them manage their expenses. Micro lending is used mainly for two purposes. The first is to provide startup assistance to small firms. This happens as there is frequently no physical financial institution in the region in such circumstances. Lenders are private individuals who promise to lend a specific sum of money to a deserving businessperson abroad.
Micro lending is managed for these humanitarian goals by organizations. In addition to presenting a business plan covering daily operations, borrowers will outline the kind of business they intend to launch and how it will function. Borrowers frequently include a personal essay and a concise biography. The second objective is to lend to those who might have poor credit and are unable to get credit from the bank or who are looking to borrow small sums of funds that are less than what a bank would consider acceptable.
There are a variety of reasons why a borrower could need money, all of which are disclosed to prospective lenders. If the creditor does not have confidence in the borrower, they may decide not to finance that specific loan. Due to a lack of interest from lenders, loans may occasionally not be fully funded. These businesses commonly make money by charging origination and maintenance fees for loans, which are subsequently applied to the interest rate of borrowers.
The pandemic caused by COVID-19 had a negative influence on the industry. In the early stages of the COVID-19 pandemic, many small and medium-sized firms went out of business, which affected the micro lending service providers. On the other hand, a number of government agencies, sometimes in conjunction with private microlenders, started giving out microloans to small firms. The primary goal of this effort was to provide assistance to businesses in their fight against the pandemic. The COVID-19 pandemic was also responsible for an increase in the amount of money invested in businesses that provide micro lending services.
Microfinance, also known as micro lending, is a form of financial assistance that is altering the way of life for a variety of individuals in emerging nations by providing them with money. The expansion of the micro lending sector is also being driven by an elevation in the number of government programs that facilitate micro lending in a variety of countries. In addition, an increase in the number of microlenders assists many developing nations in their efforts to reduce poverty and also enhances the living standard of those individuals who are economically disadvantaged.
The rise of micro lending is fueled in part by an increase in the rate at which the microfinance industry is embracing digital technologies. This is done in order to open up new distribution channels for customers and expand the scope of potential profits. Furthermore, the widespread adoption of innovative technologies in the microfinance industry in emerging countries, like mobile banking, automated teller machines, point-of-sale terminals, and others, is creating future opportunities for businesses.
In general, but not always, alternative business finance offers higher rates, shorter credit terms, and smaller loan amounts. Many microlenders work with entrepreneurs who wouldn't have been authorized for a bank loan, albeit it varies depending on the type of loan they are eligible for. This suggests that the amount of finance they are qualified for is often lower, with a shorter time of payback. Business owners consequently have less money and time to spend the extra money.
Based on Service Provider, the market is segmented into Banks and Micro Finance Institutes (MFIs). The bank segment garnered the highest revenue share in the micro lending market in 2021. The expansion can be attributed to the expanding partnerships that banks are forming with various other micro lending service providers to assist a variety of proprietors of small businesses and other types of organizations. For example, HSBC India and the Asian Development Bank entered into an agreement with the intention of launching a partial guarantee program with a budget of one hundred million US dollars.
On the basis of end user, the micro lending market is divided into solo entrepreneurs & individuals and micro, small & medium enterprises. The solo entrepreneurs & individuals segment procured a substantial revenue share in the micro lending market in 2021. The expansion of this segment is being fueled in large part by the numerous programs that have been started by organizations that are not-for-profit specifically for social and women entrepreneurs.
| Report Attribute | Details |
|---|---|
| Market size value in 2021 | USD 28.7 Billion |
| Market size forecast in 2028 | USD 65.4 Billion |
| Base Year | 2021 |
| Historical Period | 2018 to 2020 |
| Forecast Period | 2022 to 2028 |
| Revenue Growth Rate | CAGR of 12.8% from 2022 to 2028 |
| Number of Pages | 141 |
| Number of Tables | 240 |
| Report coverage | Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Companies Strategic Developments, Company Profiling |
| Segments covered | Service Provider, End-user, Region |
| Country scope | US, Canada, Mexico, Germany, UK, France, Russia, Spain, Italy, China, Japan, India, South Korea, Singapore, Malaysia, Brazil, Argentina, UAE, Saudi Arabia, South Africa, Nigeria |
| Growth Drivers |
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| Restraints |
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Based on region, the micro lending market in analyzed across North America, Europe, Asia Pacific, and LAMEA. The Asia Pacific segment recorded the maximum revenue share in the micro lending market in 2021. The expansion of businesses throughout the region is responsible for the recent population boom and economic growth. As per the Startup India Hub, for example, India is one of the leading startup ecosystems in the world.
Free Valuable Insights: Global Micro Lending Market size to reach USD 65.4 Billion by 2028
The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include Funding Circle Limited (Funding Circle Holdings plc), On Deck Capital, Inc. (Enova International, Inc.), American Express Kabbage Inc. (American Express Company), LendingClub Bank (LendingClub Corporation), Zopa Bank Limited, Biz2Credit, Inc., Lendio, Inc., Bluevine Capital, Inc., Fundera, Inc. (NerdWallet), and StreetShares, Inc.
By Service Provider
By End User
By Geography
The global Micro Lending Market size is expected to reach $65.4 billion by 2028.
Increase In The Use Of Micro Lending In Less Developed Countries For The Purpose Of Lifestyle Improvement are driving the market in coming years, however, Micro Lending Loans With Smaller Sums And Shorter Maturities restraints the growth of the market.
Funding Circle Limited (Funding Circle Holdings plc), On Deck Capital, Inc. (Enova International, Inc.), American Express Kabbage Inc. (American Express Company), LendingClub Bank (LendingClub Corporation), Zopa Bank Limited, Biz2Credit, Inc., Lendio, Inc., Bluevine Capital, Inc., Fundera, Inc. (NerdWallet), and StreetShares, Inc.
The expected CAGR of the Micro Lending Market is 12.8% from 2022 to 2028.
The Micro, Small & Medium Enterprises segment acquired maximum revenue share in the Global Micro Lending Market by End-user in 2021 thereby, achieving a market value of $42.8 billion by 2028.
The Asia Pacific market dominated the Global Micro Lending Market by Region in 2021, and would continue to be a dominant market till 2028; thereby, achieving a market value of $24.9 billion by 2028.
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