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2020

Micro lending Market

Micro lending Market Size, Share, Competitive Landscape and Trend Analysis Report by Service Provider and End User : Global Opportunity Analysis and Industry Forecast, 2020-2027

BI : Financial Services

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Author's: Pramod Borasi| Shadaab Khan | Onkar Sumant
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The global micro lending market size was valued at $134.35 billion in 2019, and is projected to reach $343.84 billion by 2027, growing at a CAGR of 12.6% from 2020 to 2027. Micro lending is a way to provide small business owners and individuals with capital to help them manage their business financially. In addition, micro lending is an important aspect for various emerging countries as it provides access to capital to the financially underserved, such as those who are unable to get checking accounts, lines of credit, or loans from traditional banks. Furthermore, government of various emerging countries are introducing favorable policy for micro lending for upsurging their economy. 

Rise in adoption of micro lending in developing nations for improving lifestyle and lesser operating & low market risk of micro lending significantly boosts the growth of the global micro lending market. In addition, surge in potential of entrepreneurs, to bring in more businesses and to start from zero level with less capital support positively impacts the growth of the micro lending market. However, small loan amount provided by micro lenders and shorter repayment time provided by lenders are expected to hamper the market growth. On the contrary, adoption of advance technology in micro financing is expected to provide lucrative opportunity for the market. 

Micro-Lending-Market-2020-2027

By end user, the micro lending market was led by the small enterprise segment in 2019, and is projected to maintain its dominance during the forecast period. Rise in number of small businesses across the developing nations of LAEMA and Asia-Pacific fuels the growth of this segment. However, the sole entrepreneurs & individual segment is expected to grow at the highest rate during the forecast period, owing to rapid adoption of micro lending among individuals for financial stability.

Region wise, the micro lending market was dominated by Asia-Pacific and is expected to witness significant growth during the forecast period. This is attributed to surge in favorable government policies for micro funding and presence of major players of the market.

The report focuses on the growth prospects, restraints, and trends of global micro lending market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the global micro lending market.

Segment review

The global micro lending market is segmented into service provider, end user, and region. In terms of service providers, the market is fragmented into banks, micro finance institute (MFI), NBFC (non-banking financial institutions) and others. Depending on end user, it is classified into solo entrepreneurs & individual, micro enterprises and small enterprises. Region wise, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Micro lending Market
By Providers
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Banks is projected as one of the most lucrative segments.

The key players profiled in the micro lending market analysis are Accion International, BlueVine, Inc., Fundera, Inc., Funding Circle, Kabbage, Inc., Kiva, Lendio, LENDR, OnDeck, and StreetShares, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry. 

COVID-19 impact analysis

The micro lending market has witnessed significant growth in the past few years; however, due to the outbreak of the COVID-19 pandemic, the market experienced a sudden downfall in the first half of 2020, as various micro and small business have shut their operations due to growing loss in various fields. Furthermore, the rise in pandemic situation has affected the cash flow of business enterprises, which in turn is expected to create significant opportunities for the growth of the market. 

Micro lending Market
By End User
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Small Enterprises is projected as one of the most lucrative segments.

Top impacting factors

Increase in adoption of micro lending in developing nations for improving lifestyle 

Micro lending or micro finance is changing the lifestyle of various people in the developing nations of Asia-Pacific and LAMEA by helping them financially. In addition, surge in government initiatives for micro lending in various countries drives the growth of the micro lending market. Furthermore, increase in in micro lenders help various emerging countries for reducing poverty and also improves the standard of living of the poor people. For instance, according to a research study conducted in Bangladesh, micro finance accounted for 40% reduction of poverty in various part of the country. Moreover, various farmers across the African countries are adopting micro lending for buying crops, which drives the growth of the micro lending industry. In addition, people in rural areas are taking loans from micro lenders for setting their own business and to raise their standard of living, which propels the growth of the market. 

Adoption of advance technology in micro financing

Surge in adoption of digital technology among the micro financial sector to create new channels for the people and to upsurge their revenue opportunity boosts the micro lending industry growth. In addition, increased connectivity in the developing nations and technological innovations in various African and Middle East countries is expected to provide lucrative opportunity for the market. Furthermore, large penetration of advance technology in micro finance sector such as mobile banking, ATMs, POS and others in developing nations is providing future opportunity for the market. For instance, in India the government is using Adhar Payment Bridge System for providing micro loans and services to the individuals across the country. Moreover, major players of the market are introducing new technology to upsurge their market share and to provide customers with enhanced experience, which is expected to provide future opportunity for the market. 

Micro lending Market
By Region
2027
Asia-pacific 
North America
Europe
LAMEA

Asia-Pacific would exhibit the highest CAGR of 13.0% during 2020-2027.

Key Benefits For Stakeholders     

  • The study provides an in-depth analysis of global micro lending market forecast along with the current & future trends to elucidate the imminent investment pockets.
  • Information about key drivers, restraints, and opportunities and their impact analysis on global micro lending market is provided in the report.
  • Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
  • The quantitative analysis of the market from 2020 to 2027 is provided to determine the market potential.

Micro lending Market Report Highlights

Aspects Details
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By Provider
  • Banks
  • Micro Finance Institute (MFI)
  • NBFC (Non-Banking Financial Institutions)
  • Others
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By End User
  • Small Enterprises
  • Micro Enterprises
  • Solo entrepreneurs & self-employed
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By Region
  • NORTH AMERICA  (US, CANADA)
  • EUROPE  (FRANCE, SPAIN, POLAND, UK, GERMANY, REST OF EUROPE)
  • ASIA-PACIFIC  (CHINA, JAPAN, INDIA, SOUTH KOREA, REST OF ASIA-PACIFIC)
  • LAMEA  (LATIN AMERICA, MIDDLE EAST, AFRICA)
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Key Market Players

StreetShares, Inc, Lendio, Accion International, Funding Circle, BlueVine Inc., Kiva, OnDeck, LENDR, Kabbage Inc., Fundera Inc

Analyst Review

The global micro lending market is anticipated to witness robust growth in emerging economies of LAMEA along with continued growth in established market of Asia-Pacific. The growth is attributed to expansion of small businesses globally, improved interest rates, lending transparency, and lesser market risks. Increase in economic strength of the developing nations such as Singapore and India is expected to provide lucrative opportunities for the market growth. LAMEA is expected to dominate the market during the forecast period. Moreover, emerging countries in Europe are projected to offer significant growth opportunities during the forecast period. Micro lending providers are expected to show further improvement in markets across rest of Asia and LAMEA, which are presently in the budding stage of alternative lending. The global players are focusing toward product development and increasing their geographical presence, owing to surge in competition among local vendors in terms of features, quality, and price. In addition, these players are adopting various business strategies to enhance their product offerings and strengthen their foothold in the market. For instance, in November 2020, Paytm partnered with partnered with Suryoday Small Finance Bank to offer instant microloans to Micro, Small, and Medium Enterprises (MSMEs) that are unable to access financial services from traditional banking players. With this lending partnership, Paytm is aiming at disbursing loans to over 1 lakh small businesses in the next 12 months to 18 months. Furthermore, more number of such key developments in various Asian countries such as China, India, and Japan is expected to provide lucrative opportunity for the market growth. 

Author Name(s) : Pramod Borasi| Shadaab Khan | Onkar Sumant

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Micro lending Market

Global Opportunity Analysis and Industry Forecast, 2020-2027