Unsecured Business Loans Market to Reach $12.5 Trillion, Globally, by 2031 at 11.7% CAGR: Allied Market Research

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Mar 24, 2023, 11:00 ET

PORTLAND, Ore., March 24, 2023 /PRNewswire/ -- Allied Market Research published a report, titled, "Unsecured Business Loans Market by Type (Term Business Loan, Overdraft, Loan on Business Credit Cards, Working Capital Loan, Others), by Enterprise Size (Large Enterprises, Small and Medium-sized Enterprises), by Provider (Banks, NBFCs, Credit Unions): Global Opportunity Analysis and Industry Forecast, 2021-2031" According to the report, the global unsecured business loans industry was valued at $4.3 trillion in 2021 and is estimated to generate $12.5 trillion by 2031, witnessing a CAGR of 11.7% from 2022 to 2031. The report offers a detailed analysis of changing market trends, top segments, key investment pockets, value chain, regional landscape, and competitive scenario.

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Drivers, Restraints, and Opportunities

Short loan application process of unsecured business loans, the surge in demand for working capital by MSMEs, and the growth of small & medium-sized enterprises (SMEs) drive the unsecured business loans market. However, compliance and regulatory issues for providers are likely to hinder the market growth during the forecast period. On the other hand, advances in technology and change in consumer preferences will present new growth opportunities for the global unsecured business loans market in the coming years.

Covid-19 Scenario

The outbreak of the COVID-19 pandemic had a significant impact on the unsecured business loans market. Many lenders became more cautious and selective about who they lent money to. This is due to the increased risk of loan defaults and bankruptcies caused by the economic uncertainty and disruptions caused by the pandemic.
Moreover, many small businesses had to shut their doors or reduce their operations, which made it more difficult for them to qualify for loans.
Consequently, the unsecured business loans market became more competitive, and lenders offered more flexible terms and lower interest rates to attract borrowers.

The working capital loan segment to dominate the market during the forecast period

Based on type, the working capital loan segment contributed to the largest share of more than one-third of the global unsecured business loans market in 2021 and is expected to maintain its dominance during the forecast period. As businesses sought to adapt to changing market conditions, many required additional working capital to fund operations, purchase inventory, and maintain cash flow. This increased the demand for working capital loans, which typically have shorter terms and lower interest rates than traditional term loans, resulting in strong growth for this segment. However, the loan on business credit cards segment is projected to witness the fastest CAGR of 14.7% from 2022 to 2031. This is largely due to the convenience and flexibility offered by credit card loans, which can be quickly accessed and used for a wide range of business expenses, including travel, entertainment, and supplies. In addition, many credit card issuers have been expanding their offerings for small business owners, such as rewards programs and cash back incentives, which may further fuel the demand for this segment.

The large enterprises segment to grab the lion's share during the forecast period

Based on enterprise size, the large enterprises segment grabbed the highest share of more than three-fifths of the unsecured business loans market in 2021 and is expected to dominate the market in 2031. This is due to their greater access to credit and financial resources. Larger companies generally have more established credit histories and stronger balance sheets, which can make it easier for them to obtain unsecured loans. Moreover, these companies may be better equipped to weather economic downturns and have more predictable revenue streams, making them more attractive to lenders. However, the small and medium-sized enterprises segment would witness the fastest CAGR of 12.9% from 2022 to 2031. This is due to the vital role that SMEs play in driving economic growth and job creation. Many governments and financial institutions are implementing policies and initiatives to support SMEs, including increased access to unsecured business loans.

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Asia-Pacific to garner the largest revenue by 2031

Based on region, the market in Asia-Pacific was the largest in 2021, accounting for more than two-fifths of the global unsecured business loans market and is likely to maintain its dominance during the forecast timeframe. This is due to its robust economic growth and the growing population of small and medium-sized enterprises (SMEs) in the region. As businesses in the region seek to expand and innovate, many require additional financing, and unsecured business loans have become an increasingly popular option. Moreover, the rise of fintech platforms and alternative lenders in the region has made it easier for businesses to access financing outside of traditional banking channels, further fueling the market growth. However, the market in LAMEA is likely to show the fastest CAGR of 14.5% during the forecast period. This is due to the economic growth in the region. Many governments and financial institutions have been implementing policies and initiatives to support SMEs, including increased access to unsecured business loans.

Leading Market Players

Bajaj Finserv Ltd.
Clix Capital
Deutsche Bank AG
National Funding
Funding Circle
OnDeck
American Express Company
HDFC Bank Ltd.
Bank of America Corporation
Wells Fargo

Key benefits for stakeholders

This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the unsecured business loans market forecast from 2021 to 2031 to identify the prevailing unsecured business loans market opportunity.
The market research is offered along with information related to key drivers, restraints, and opportunities.
Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
In-depth analysis of the unsecured business loans market segmentation assists to determine the prevailing market opportunities.
Major countries in each region are mapped according to their revenue contribution to the global market.
Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
The report includes the analysis of the regional as well as global unsecured business loans market trends, key players, market segments, application areas, and market growth strategies.

Unsecured Business Loans Market Report Highlights

Type

Term Business Loan
Overdraft
Loan on Business Credit Cards
Working Capital Loan
Others

Enterprise Size

Large Enterprises
Small and Medium-sized Enterprises

Provider

Banks
NBFCs
Credit Unions

By Region

North America (U.S., Canada)
Europe (UK, Germany, France, Italy, Spain, 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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