Here are some key takeaways from the report: In The Small Business Alternative Lending Report, Business Insider Intelligence analyzes the market opportunity for alternative lenders, forecasts the market share and volume growth ofĪlternative lending platforms, profile key players, and addresses the main industry risks. But a lternative small business lending platforms will originate $52 billion and gain a 20.7% share of the total market by 2020, driven by the continued growth of new players, increased borrower awareness and interest, and most importantly, major partnerships with big banks. We estimate that alternative small business lenders originated $5 billion and had a 4.3% share of the small business lending market in the US in 2015.
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Alternative small business lending companies provide digital platforms that connect small business borrowers to capital using nontraditional means. Alternative small business lending platforms use machine learning and digital tools to extend credit to a wide array of small businesses quickly and efficiently, particularly to those that have been rejected by banks. This leaves a massive amount of unfulfilled loans that we estimate reached $96.5 billion in Q4 2015.Īlternative lending companies have stepped in to capitalize on the opportunity available in helping meet more small business' lending needs.
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This is partially because banks have retreated from this segment because issuing loans to small businesses using the traditional underwriting model is expensive. But small businesses are underfunded - only half of small businesses with $100,000 to $1 million of annual revenue received at least some of the financing they applied for from large banks in late 2015.