Alternative Financing Market
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Alternative Financing Market size was valued at over USD 10 billion in 2022 and is anticipated to grow at a CAGR of over 15% between 2023 and 2032. Millennials & young adults entering the workforce are driving the need for change and greater financial efficiency as they seek to start businesses and invest in their financial futures. The market is also propelled by factors including increased access to capital, flexibility, lower costs, innovation & technology, and public change with alternative financing.
Alternative finance refers to financial channels, processes, and instruments that have emerged outside of the traditional finance system such as regulated banks and capital markets. Alternative lenders often offer an easier & faster loan process than traditional lenders such as banks. Furthermore, Technological developments, especially in fintech and online loan platforms, played an important role in the growth of the economy.
| Report Attribute | Details |
|---|---|
| Base Year: | 2022 |
| Alternative Financing Market Size in 2022: | USD 10 Billion |
| Forecast Period: | 2023 to 2032 |
| Forecast Period 2023 - 2032 CAGR: | 15 |
| 2023 Value Projection: | USD 40 Billion |
| Historical Data for: | 2018 - 2022 |
| No of Pages: | 250 |
| Tables, Charts & Figures: | 208 |
| Segments Covered: | Type, End-Use |
| Growth Drivers: |
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| Pitfalls Challenges: |
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The major limitation of the business is the lack of knowledge and understanding of the options available. Many individuals and businesses still need to be familiar with other financial products and their benefits. However, providing clear and concise information about the benefits, risks and methods of alternative financing can increase confidence and encourage adoption of alternative financing methods.
The alternative financing market growth is being driven by the increasing use of the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), and other similar technologies. Alternative financing provides solutions to businesses to sustain themselves in the industry by providing access to capital in difficult times. Alternative financing methods are generally seen as more flexible and less costly than bank loans. This has encouraged many businesses to use alternative financing to raise capital. As regulations provide protection to borrowers and lenders, government support increases consumer confidence in other financial options.
The alternative financing market from businesses segment was dominated around USD 5.5 billion revenue in 2022. The main advantage for businesses using alternative financing is the ability to secure capital quickly and effectively. Traditional financing options, such as bank loans or venture capital, can take time & effort and often require extensive documentation & lengthy approval processes. Alternative financing options, such as financial aid, peer-to-peer loans, or utility bills, can give businesses access to capital within days or hours, enabling them to take advantage of the brick face and stay ahead of the competition.
The peer-to-peer lending segment held significant market share of over USD 4 billion in 2022. Peer-to-peer lending provides a more efficient & effective way for individuals and businesses to obtain loans. Online peer-to-peer lending platforms allow borrowers to apply for loans anytime & anywhere. This is particularly helpful in areas where access to credit is limited or non-existent and for those who need help obtaining loans from traditional financial institutions.
The North America alternative financing market accounted for 30% revenue share in 2022. North America has the presence of a large & growing financial services industry, good infrastructures, and a large pool of investors & borrowers. This provides a good working environment for other financial service providers, giving them access to a large client base and the capital they need to grow & succeed. The high level of innovation and technological advancements in the region.
Major companies operating in the alternative financing market include:
Market, By Type
Market, By End Use
The above information is provided for the following regions and countries:
The market size of alternative financing was worth more than USD 10 billion in 2022 and will witness over 15% CAGR from 2023 to 2032, due to surging need for greater financial efficiency amongst millennials.
The businesses end-user segment reached over USD 5.5 billion in 2022, owing to the growing need for securing capital quickly and effectively.
Borrowers First, Credoc, Finastra, Funding Circle, GoFundMe, Kickstarter, Kiva Microfunds, LendingClub, LendingCrowd, Prosper Funding LLC, RateSetter, Sofi, Quicken Loans (Rocket Mortgage, LLC), Upstart Network, Inc. and Zopa are some leading market players.
North America accounted for over 30% of the alternative financing market share in 2022, attributed to the strong presence of a large and growing financial services sector in the region.