Allied Market Research published a report, titled, “Corporate Lending Market by Loan Type (Term Loan, Overdraft, Invoice Finance, Loan Against Securities, Others), by Type (Secured Lending, Unsecured Lending), 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 corporate lending industry generated $17.6 trillion in 2021, and is estimated to reach $47.2 trillionby 2031, witnessing a CAGR of 10.7% 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
Flexible long-term lending offered by corporate lending options, the faster processing and sanctioning of loans by corporate lending options, increasing collaboration between digital lending organizations and FinTech companies for payment collection, and corporate lending’s benefit of allowing small firms and green lending company to access substantial sums of money by aggregating all their funding into one loan drive the growth of the global corporate lending market. However, non-performing assets (NPA), especially during the pandemic hampered the global market growth. On the other hand, developing economies increasingly digitizing various banking operations, advancements in smartphones, and the growing adoption of digital lending services among euro lending company present new growth opportunities for the global market in the coming years.
- The COVID-19 pandemic impacted the corporate lending industry positively, owing to an increase in corporate loans as most businesses went bankrupt.
- Moreover, many banks were overburdened by the increase in corporate loans during the pandemic as firms sought financing. Moreover, the pandemic also resulted in the financial industry’s enhanced attention on digital services as well as their demand from customers.
- Owing to the closure of bank offices and significant wait times for phone help, previously hesitant internet users also adopted these channels for corporate loans during the pandemic. This factor became one of the major growth factors for the corporate lending market during the period.
The term loan segment to maintain its revenue dominance during the forecast period
Based on loan type, the term loan segment was the largest market in 2021, contributing to nearly half of the global corporate lending market, and is expected to maintain its leadership status during the forecast period. This is because term loans generally carry no penalties if they are paid off ahead of schedule. They are also offered at lower interest rates which attracts corporates to choose it. The interest rates are fixed, and do not vary during the loan’s lifetime. On the other hand, the loan against securities segment is projected to witness the fastest CAGR of 14.7% from 2022 to 2031. This is because loan against securities of any kind is secured and has a lower interest rate than most unsecured loans and credit cards.
The secured lending segment to maintain its dominance during the forecast period
Based on type, the secured lending segment held the largest market share of nearly three-fourths of the global corporate lending market in 2021 and is expected to maintain its dominance during the forecast period. Rise in real estate industry in recent years boosted the need for secured loans in finance. Customers opting for loans to purchase new properties for the expansion of business aided the growth of the market. On the other hand, the unsecured lending segment is projected to witness the largest CAGR of 13.6% from 2022 to 2031. Businesses are increasingly opting for unsecured lending to get quick loan approval and save time for paperwork. This is primarily due to the widespread use of credit bureau ratings, as well as high moral responsibility of borrowers not to default, and the use of data analytics in underwriting and credit monitoring.
The large enterprises segment to garner the largest revenue during the forecast period
Based on enterprise size, the large enterprises segment was the largest market in 2021, contributing to more than three-fifths of the global corporate lending market, and is expected to maintain its leadership status during the forecast period. This is because large enterprises are opting for corporate loans to expand their businesses and improve the cash flow. In addition, they mostly choose business loans to acquire other firms for business expansion. On the other hand, the small and medium-sized enterprises segment is projected to witness the fastest CAGR of 13.2% from 2022 to 2031. The surge in entrepreneurs, either aspiring to set up a new business or modify and expand a current establishment is boosting the segmental growth.
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Asia-Pacific to achieve a progressive revenue growth by 2031
Based on region, Asia-Pacific was the largest market in 2021, capturing two-fifths of the global corporate lending market. The lending processes in Asia-Pacific banks implement unprecedented number of loan deferrals, payment holidays and government guarantee using rapidly installed technology such as FinTech, Machine Learning and others to fasten the process of loan approvals. However, the market in LAMEA is expected to lead in terms of revenue and manifest the fastest CAGR of 13.8% during the forecast period. New-age FinTech players in the LAMEA region are capturing SME businesses with their shorter, faster, and transparent loan approval processes.
Leading Market Players
- Morgan Stanley
- Citigroup, Inc.
- CREDIT SUISSE GROUP AG
- GOLDMAN SACHS
- JULIUS BAER
- Bank of America Corporation
- Clifford Chance
- JPMorgan Chase & Co.
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