Allied Market Research

2024

Working Capital Loan Market

Working Capital Loan Market Size, Share, Competitive Landscape and Trend Analysis Report by Service Provider and by End User : Global Opportunity Analysis and Industry Forecast, 2023-2032

BI : Financial Services

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Author's: | Onkar Sumant
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Working Capital Loan Market Outlook – 2027 

The working capital loan market size is growing subsequently and is expected to grow during the forecast period, owing to increase in number of investors in past few years. These loans are basically short-term business loans, which come with repayment period of around 1 year. In addition, these loans can be obtained easily; however, cannot be used to buy or invest in long term assets. 

The major objective of a working capital loan is to meet short-term financial needs for a company such as salary payments, short term operations, bills payments, and trade credit. Different types of working capital loans available in the market include bank overdraft or line of credit, short-term secured loans, and trade credit. 

The global working capital loan market is segmented on the basis of service provider, end user, and region. Based on service provider, the market is divided into banks, non-banking financial institutions, and others. On the basis of end user, the market is bifurcated into business and individuals. Geographically, the market is analyzed across several regions such as North America, Europe, Asia-Pacific, and Latin America, Middle East & Africa (LAMEA).

Key players operating in the global working capital loan industry include U.S. Bancorp, Bank of America Corporation, Wells Fargo & Company, Citibank, JPMorgan Chase & Co., BB&T, PNC Financial Services Group Inc., Regions Financial Corporation, JPMorgan Chase Bank, and First Citizens Bancshares Incorporated. These companies have adopted several strategies such as product launches, partnerships, collaborations, mergers & acquisitions, and joint ventures to strengthen their foothold in the global working capital loan market.

Top Impacting Factors

Growth illiquidity in small businesses, high need for leveraging loans to finance debt and availability of easy and collateral free loans are the key factors that drive the working capital loans market. However, several factors such as high risk of defaults and volatility in interest rates hinder the working capital loan market growth. 

Moreover, growth of startups in developing economies, which always need working capital funding and increase in adoption of advanced technologies in lending process are expected to create lucrative opportunities for the market. 

New Launches to Flourish the Market

New services are regularly being introduced in the working capital loan industry to attract large base of borrowers. For instance, Indian Overseas Bank started offering working capital loan to the agriculture sector in the light of COVID-19 pandemic, in April 2020. Similarly, Smartphone giant Xiao announced to offer working capital loans to its offline retail customers, in May 2020. 

In addition, SOLV, a lending institution in India introduced emergency working capital loan for medium and small enterprises to support them with financial assistance to help meet their current demands. More number of such services offered by these lenders act as life savers for borrowers, thus, in turn, boosts the market growth.

Surge in Use of Working Capital Loans and Applications

Globally, more than 28% of firms reported using banks to finance their working capital. For instance, several research studies have shown that from March to April 2020, in India, sanctions of working capital loans got doubled. In East Asia-Pacific, firms that utilize working capital loan got increased to 26%. Similarly, in Latin America, over 41% of firms finance their working capital through banks.

In addition, non-banking financial institutions are also exploring their working capital loan businesses globally. The major factor for this growth in non-banking financial companies (NBFCs) loans include reduced involvement of banks in issuing cash flow-oriented loans and increasing penetration of NBFCs in offering working capital loans in the recent years.

Key Benefits of the Report

  • This study presents the analytical depiction of the global working capital loan market along with the current working capital loan market trends and future estimations to determine the imminent investment pockets.
  • The report presents information related to key drivers, restraints, and opportunities along with detailed analysis of the working capital loan market share. 
  • The current market is quantitatively analyzed to highlight the market growth scenario.     
  • Porter’s five forces analysis illustrates the potency of buyers & suppliers in the market. 
  • The report provides a detailed working capital loan market analysis based on the present and future competitive intensity of the market.

COVID-19 Scenario Analysis

  • Globally, the lockdown has caused supply chain shutdowns. These shutdowns have affected cash and working capital requirements. 
  • Most companies are unable to carry their businesses forward, owing to liquidity issues and capital requirements. 
  • These shutdowns have led to a big downturn in demand for loans as manufacturing and productions companies have unsold inventory.
  • This has caused uncertainties in cash-flows to finance institutions. In addition, situations have created several challenges for lenders in collecting receivables in time. 
  • Both supply and value chain disruptions have left challenges in front of both clients and lenders in this pandemic.

Questions Answered in the Working Capital Loan Market Research Report

  • Who are the leading market players active in the global working capital loan market?
  • What would be the detailed impact of COVID-19 on the global working capital loan market?
  • How current trends would influence the market in the next few years?
  • What are the driving factors, restraints, and opportunities in the global working capital loan market?
  • What are the projections for the future that would help in taking further strategic steps?

Working Capital Loan Market Report Highlights

Aspects Details
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By Service Provider
  • Banks
  • Non-Banking Financial Institutions
  • Others
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By End User
  • Business
  • Individuals
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By Region
  • North America  (U.S., Canada)
  • Europe  (UK, Germany, France, Spain, Italy, Rest of Europe)
  • Asia-Pacific  (China, Japan, India, Australia, South Korea, Rest of Asia-Pacific)
  • LAMEA  (Latin America, Middle East, Africa)
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Key Market Players

Wells Fargo & Company, BB&T, Bank of America Corporation, Citibank, PNC Financial Services Group Inc., JPMorgan Chase & Co., Regions Financial Corporation, First Citizens Bancshares Incorporated, JPMorgan Chase Bank, U.S. Bancorp

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Working Capital Loan Market

Global Opportunity Analysis and Industry Forecast, 2023-2032