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The unsecured business loans market size is estimated to grow at a CAGR of 10.92% between 2023 and 2028. The market size is forecast to increase by USD 3,496.23 billion. The accelerated growth of the market is due to various factors, including the increasing number of SMEs, the use of advanced technologies in loan processing, and increasing awareness and acceptance of unsecured business loans.
The report offers extensive research analysis on the Unsecured Business Loans Market, with a categorization based on End-user, including small and medium-sized enterprises and large enterprises. It further segments the market by Type, encompassing short-term loans, medium-term loans, and long-term loans. Additionally, the report provides Geographical segmentation, covering APAC, Europe, North America, Middle East and Africa, and South America. Market size, historical data (2018-2022), and future projections are presented in terms of value (in USD billion) for all the mentioned segments.
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Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Increasing number of SMEs is notably driving the unsecured business loans market growth. Over the past decade, banks and financial institutions have transformed their operations by embracing digital technology to streamline processes and save time. A business lending process typically consists of creating, initiating, administering, collecting, and administering credits. The loan process mainly includes the stages of pre-qualification, loan application, application processing, underwriting process, loan decision, quality control, loan financing, etc.
As a result, financial institutions are adopting new technology solutions such as lending software and loan management software to improve operational efficiency and reduce costs. Such software helps in efficient loan monitoring by managing loan portfolios at all stages such as processing, application, verification, approval, and payment. Therefore, the application of software in unsecured commercial lending coupled with the rising demand for efficiency in commercial lending will drive market growth during the forecast period.
Increasing focus on blockchain is a key trend influencing the unsecured business loans market growth. Blockchain technology is one of the major innovations in the banking industry, primarily to reduce fraud, ensure fast and secure transactions and financial operations, and support risk management within the interconnected global financial system. In addition, blockchain is revolutionizing payments, modernizing traditional and traditional payment methods in a faster, more secure, and decentralized way.
Moreover, blockchain technology helps make the credit system more efficient because the entire process can be completed more quickly and data is stored in the blockchain system in chronological order and cannot be tampered with once stored. In addition, this technology can create a digital identity containing all information such as income, credit score, and credit history in one place or block on the blockchain network. Hence, such factors are driving the market growth during the forecast period.
High risk and cost associated with unsecured business loans are challenging the unsecured business loans market growth. Applying for an unsecured loan is generally quicker and less complicated than a secured loan. However, this comes with various risks and many local banks do not offer unsecured loans. Lenders de-risk unsecured loans in hopes of being able to repay them in less time. This means the buyer has less time to repay the loan, which can be difficult for some businesses. Unsecured loan interest rates range from slightly higher than secured loans.
In addition, lenders offering unsecured business loans expect high creditworthiness, verifiable income, and a financial history that indicates the buyer will repay the loan. A rise could negatively impact buyers, causing them to shift to secured loans. This will adversely affect the growth of the market during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Unsecured Business Loans Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
American Express Co: The company offers unsecured business loans that can be used to purchase inventory and other business needs, equipment financing to invest in new equipment, smooth cash flow or cover payroll, offset unpaid customer invoices.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The small and medium-sized enterprises segment is estimated to witness significant growth during the forecast period. Business loans comprise a type of financing option that guarantees a steady flow of money to SMEs so that they can continue their business operations. In addition, unsecured business loans enable the borrower to leverage its benefits without needing to provide any asset/commodity as collateral. Furthermore, SMEs have started adopting unsecured business loans significantly in recent years.
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The small and medium-sized enterprises segment was the largest segment and was valued at USD 2,896.06 billion in 2018. Moreover, an unsecured business loan provides a viable alternative for SMEs to access funds for a variety of purposes, including working capital, investing in new projects, and expansion plans, as traditional banking and lending options have become more restrictive. In addition, in comparison with traditional banking options, an unsecured business loan offers more flexibility, quicker access to funds, and reduces the burden of providing something as collateral. Furthermore, the presence of a very high number of SMEs in developing nations such as India and China leads to an increase in demand for unsecured business loans. Hence, such factors are fuelling the growth of this segment which in turn drives the market growth during the forecast period.
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North America is estimated to contribute 38% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market in North America is expected to grow during the forecast period as countries in the region such as the United States are among the most technologically advanced and are pioneers in adopting technologies such as AI and IoT. Leading commercial lending banks in the region, including Goldman Sachs Group, American Express, and Bank of America, are investing in technology by delivering new applications and interfaces to better serve their customers. Additionally, these providers offer a variety of unsecured business loans, professional loans, working capital loans, inventory loans, commercial loans, etc. Therefore, the presence of key vendors in this region will drive the growth of the market during the forecast period.
The unsecured business loans market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
Unsecured Business Loans Market Scope |
|
Report Coverage |
Details |
Page number |
165 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 10.92% |
Market Growth 2024-2028 |
USD 3,496.23 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
10.2 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 38% |
Key countries |
US, China, Japan, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
American Express Co., Axis Bank Ltd., Bajaj Finserv Ltd., Bank of America Corp., Bank of Ireland, Business and Enterprise Finance Ltd., Clix Capital Services Pvt. Ltd., Deutsche Bank AG, Enova International Inc., Funding Circle Holdings plc, HDFC Bank Ltd., Hero FinCorp Ltd., IDFC FIRST Bank Ltd., National Funding Inc., Poonawalla Fincorp Ltd., Rapid Finance, Standard Chartered PLC, Starling Bank, Wells Fargo and Co., and Bank of China Ltd. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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