Asset-Based Lending Market Expected to Reach $1,721.38 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Asset-Based Lending Market," The asset-based lending market was valued at $561.45 billion in 2021, and is estimated to reach $1,721.38 billion by 2031, growing at a CAGR of 12.2% from 2022 to 2031.

Asset-based lending is gaining massive traction among businesses, as low costs of asset-based loans and easy loan availability are driving the market growth. Further, due to their ability to facilitate quicker, cashless, and paperless borrowing, lending-as-a-service (LaaS) platforms are becoming more popular. The use of online technology on a bank's or credit union's website for online applications, assessments, fulfilment, and repayments is referred to as the digitalization of a LaaS platform. This makes it possible to lend using advanced technology and possibly useful non-financial data (big data) for credit-based on e-commerce platform payments. This advances the use of digital lending without physical currency. Thus, this factor is fueling the growth of asset-based lending market.

Furthermore, major market players have undertaken various strategies to increase the competition and offer enhanced services to their customers. For instance, in May 2022, Santa Cruz County Bank announced the launch of its asset-based lending division led by Lee Shodiss and Shelly Medina. The Bank's new asset-based lending division is projected to specialize in serving business clients and emerging companies requiring asset liquidity and flexible lines of credit in addition to full banking services.

Furthermore, in April 2022, UK-based mid-sized lender Metro Bank has launched a new Asset Based Lending (ABL) product. The bank will grant credit of at least £2 million secured by a variety of assets, including stock, plants, debtors, machinery, and commercial real estate. Customers of Metro Bank, both current and new, are welcome to take advantage of this offer, which may be utilized for a variety of business requirements, such as the refinancing of existing loans, acquisition, and organic expansion. Together with current and savings account services, Metro Bank also provides cashflow loans, revolving credit, and overdrafts in addition to ABL.

Moreover, in October 2022, a new funding option for asset-based lending (ABL) has been introduced by Time Finance. Clients will be able to access working capital and raise money in the face of growing prices thanks to the product, which is targeted at UK SMEs. The system will allow UK SMEs to access cash tied to their company's equipment, inventory, and real estate, including plant and machinery. Time Finance can provide working capital of up to £2.5 million when used in conjunction with an invoice finance arrangement.

On the basis of end user, the large enterprises segment acquired the highest share in asset-based lending market in 2021. This is owing to the rise in need for sophisticated and developed facilities & services for large businesses. Further, large enterprises are choosing asset-based loans to expand their businesses and to improve the cash flow.

By region, Asia-Pacific attained the highest asset-based lending market size in 2021. This is attributed to the phenomenal growth of digital banking that has led to declining usage of physical bank branches with an increasing threat of digital players capturing a substantial market share. Further, the growing innovations in fintech companies have also now started venturing out from the traditional payments and transactions. They are introducing innovative offerings in areas like lending & investments, which eventually has led to increase the borrower’s expectations in terns speed, security, and data privacy. However, for traditional asset-based lending lenders, the journey to embrace the latest innovations has been slow and steady.

The COVID-19 pandemic had a positive impact impact on the asset-based lending industry. Moreover, the global asset-based lending market has witnessed rise in growth during the COVID-19 pandemic, owing to the dramatically increased digital penetration during the period of COVID-19-induced lockdowns and supply chain disruptions resulting in dilution of businesses, which further fueled the demand for asset-based lending tools. In addition, the unexpected social and financial disruption caused by the pandemic has forced the loss-making businesses all around the world to rely on lending schemes provided by banks and financial institutions. Moreover, many banking and finance organizations offered the widest set of solutions through asset-based lending schemes, which helped to boost the asset-based lending market growth during pandemic. Therefore, the COVID-19 positively impacted the asset-based lending market.

Key Findings of the Study

• By end user, the large enterprises segment led the asset-based lending market in terms of revenue in 2021.
• By interest rate, the fixed rate segment accounted for the highest asset-based lending market share in 2021.
• By region, Asia-Pacific generated the highest revenue of asset-based lending market in 2021.

The key players profiled in the asset-based lending market analysis are Lloyds Bank, Barclays Bank PLC, Hilton-Baird, JPMorgan Chase & Co., Berkshire Bank, White Oak Financial, LLC, Wells Fargo, Porter Capital, Capital Funding Solutions Inc., and Crystal Financial. These players have adopted various strategies to increase their market penetration and strengthen their position in the asset-based lending market trends.