Over the last decade, business peer-to-peer lending, also known as crowdlending, has become an appealing alternative financial source for small and medium-sized businesses worldwide. Although lending platforms have not been immune to the COVID-19 crisis, the entire sector continued its impressive growth, despite the disruption caused by the pandemic.
According to data presented by Finaria, the transaction value of the global business P2P lending market jumped by almost 14% year-over-year amid the coronavirus outbreak reaching $206.1bn value in 2020. The increasing trend is set to continue in 2021, with the entire sector growing by 17% YoY and reaching a $241.6bn value.
Transaction Value Surged by 124% in Three Years
The rise of the global P2P lending industry started during the 2008 financial crisis when banks cut back on loans to individuals and small firms, fearing defaults. It set the groundwork for the modern peer-to-peer platforms, one of the fastest-growing sectors in the fintech industry. Instead of borrowing from a single source, companies were given the ability to lend directly from tens or even hundreds of individuals.
By using sophisticated computer algorithms to make lending decisions, P2P platforms removed the banks from the equation and connected borrowers directly to lenders. On the other hand, investors were given the ability to easily invest in loans outside of their countries at attractive returns.
In 2017, the global business P2P lending market reached $108.4bn value, revealed the Statista survey. The entire sector’s transaction value surged by 90% in the three years, reaching $206.1bn in 2020.
Statistics show this figure is expected to rise by $35.5bn in 2021 and continue growing in the following years. By 2024, the entire business P2P lending industry is expected to be worth more than $297bn.
The Statista survey also revealed the number of successfully funded alternative loans in the business sector is forecast to hit 46.1 million in 2021, a 46% jump in four years. By 2024, this figure is set to rise to 53.1 million.
China Dominates the Business P2P Lending Industry
China is the largest single player in the global fintech lending market, forecast to grow at almost 18% compound annual growth rate, and hit $224.4bn value in 2021. Over the last nine years, the Chinese business platform lending market has witnessed incredible growth rates. However, this rapid rise was marked by weak regulatory oversight.
As the second-largest globally, the US business P2P lending industry is expected to jump by 10.4% YoY and hit $7.9bn value in 2021, 28 times less than the leading Chinese market.
The UK’s crowdlending industry is the third-largest in the world, according to the survey, and is forecast to hit $2.5bn value this year. Switzerland and Italy follow with $1.3bn and $723 million, respectively.