The global commercial lending market is expected to record revenues of $27,406.6 billion by 2028, at a compound annual growth rate of 14.4% over the forecast period from 2021 to 2028, according to new report From Research Diving.
Dynamics of the commercial lending market
- Drivers: Commercial lending has the lowest interest rates and enables business owners to obtain critical financing and benefit from lower management costs. Commercial lending repayment plans can also be extended for several years, allowing organizations to invest in other aspects of their business such as employee training, overhead management, and sales. These factors are expected to drive the growth of the global commercial lending market during the time frame of the analysis.
- Chances: Technological developments such as machine learning, blockchain, and artificial intelligence as well as online business loan start-ups are rapidly booming. These emerging technologies are making business loan processes faster and more efficient. These factors are expected to provide ample growth opportunities for the global commercial lending market during the forecast period.
- Limitations: The increase in the size of non-performing assets (NPA) is the main factor expected to impede the growth of the global commercial lending market.
Impact of COVID-19 on the commercial lending market
The COVID-19 outbreak has had a positive impact on the global commercial lending market due to the sudden rise in industrial and commercial loans since many businesses went out of business amid the pandemic. The involvement of small and medium-sized businesses in commercial loan lending has also boosted market growth during the pandemic. Moreover, the banks have seen a rise in the demand for business loans as most of the companies are asking for additional financing. These factors have boosted market growth during pandemic stress.
Commercial lending market segments
The report has segmented the commercial lending market into multiple segments based on type, organization size, service providers, and regional analysis.
- By type, the unsecured sub-segment is expected to maintain a dominant market share and generate revenue of $15,647.8 billion during the 2021-2028 time frame due to the growing preference for unsecured loans by companies to help them expand their operations. Moreover, unsecured loans offer low interest rates and easy access to credit. In addition, unsecured loans are very suitable for small businesses that lack the resources to secure secured loans and other traditional types of loans. These factors are estimated to drive the growth of the sub-sector by 2028.
- Depending on the size of the organization, the SME sub-sector is expected to have the fastest growth rate of 16.9% during the years of analysis. The number of small and medium-sized businesses globally has grown exponentially in recent years, and easy access to unsecured and bank-provided loans is boosting many start-ups and mid-sized businesses. The increasing government initiatives for easy commercial lending and unsecured loans to SMEs are also beneficial for start-ups. These factors are expected to drive further growth of the sub-sector by 2028.
- By region, the commercial lending market in Asia Pacific is estimated to see better growth opportunities and exceed $7,081.9 billion by 2028 due to the growing number of SMEs in this region. Moreover, the increasing technological developments such as blockchain, artificial intelligence, and machine learning in this region are also expected to boost the market development in the Asia Pacific region during the forecast period.