The sole entrepreneurs and individual segment is expected to experience significant growth in the coming years, owing to rise in adoption of micro lending and micro financing services among the individuals for financial stability and to overcome poverty.
According to a recent report published by Allied Market Research, titled, “Micro Lending Market by Service Provider and End-User: Opportunity Analysis and Industry Forecast, 2020–2027,” the global micro lending market size was valued at $134.35 billion in 2019, and is projected to reach $343.84 billion by 2027, growing at a CAGR of 12.6% from 2020 to 2027.
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Micro lending is a type of financial service provided to people, who are looking to lend money to earn potentially high returns may fund borrowers who have no access to financial services such as banks or credit unions. The lending can be done to single microloans, and to diversify risk exposure, others invest across a portfolio of microloans. The services in the micro lending market are designed to become more affordable to poor and socially marginalized customers, households to have a wide variety of high-quality financial products and services, and to help them become self-sufficient. Moreover, growing adoption of micro lending in developing nations for improving lifestyle and lesser operating & low market risk of micro lending significantly boosts the growth of the global micro lending market. In addition, rise in potential of entrepreneurs, to bring in more businesses and to start from zero level with less capital support positively impacts the growth of the market. However, small loan amount provided by micro lenders and shorter repayment time provided by lenders are expected to hamper the market growth. On the contrary, adoption of advance technology in micro financing is expected to provide lucrative opportunity for the market.
The bank segment is expected to garner a significant share during the forecast period. This is attributed to rise in adoption of micro lending and micro financing scheme from various banks and fintech for small and medium enterprises. However, the micro finance institute (MFI) segment is expected to grow at the highest rate during the forecast period, owing to growing micro finance institute across the globe and rise in need of micro loans among the general public.
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Region wise, the micro lending market was dominated by Asia-Pacific in 2019, and is expected to witness significant growth rate during the forecast period. This is attributed to surge in surge in government initiative to reduce poverty and to upsurge the living standard of the people.
The outbreak of the COVID-19 pandemic has a significant impact on the micro lending market owing to affected cash flow among the financial sector and rising liquidity issues among the micro lenders. In addition, surge in unemployment in various emerging countries and closing of different small and medium enterprises negatively impacts the growth of the market during the first half of 2020. Moreover, banks and financial institutions across the globe are majorly focusing on digitizing their financial assets as well as lending schemes, which is expected to capture large customer base in the upcoming years.
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Key Findings Of The Study
- By service provider, the banks segment accounted for the micro lending market share in 2019.
- Region wise, Asia-Pacific generated the highest revenue in 2019.
- Depending on end user, the small enterprises segment accounted for the micro lending industry share in 2019.
The key players profiled in the micro lending market analysis are Accion International, BlueVine, Inc., Fundera, Inc., Funding Circle, Kabbage, Inc., Kiva, Lendio, LENDR, OnDeck, and StreetShares, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
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