The global commercial loan market is estimated to register a revenue of $27.406.6 billion by 2028, growing at a healthy CAGR of 14.4% during the forecast period from 2021 to 2028, according to a new report from Research Dive.
Commercial Loan Market Dynamics
- Drivers: Commercial loans have the lowest interest rates and allow business owners to obtain crucial financing and benefit from reduced administration costs. Commercial loan payment plans can also be extended for multiple years, allowing organizations to invest in other aspects of their business, such as employee training, overhead management, and sales. These factors are expected to drive the growth of the global commercial loan market over the analysis period.
- Opportunities: Technological advancements such as machine learning, blockchain, artificial intelligence as well as the launch of online business loans are gaining rapid momentum. These emerging technologies are making commercial lending processes faster and more efficient. These factors are expected to provide abundant growth opportunities for the global commercial loan market over the forecast period.
- Constraints: The increase in the number of non-performing assets (NPA) is the major factor likely to hamper the growth of the global commercial loan market.
Impact of COVID-19 on the commercial loan market
The outbreak of the COVID-19 pandemic has had a positive impact on the global commercial loan market owing to a sudden increase in industrial and commercial loans since several companies ceased operations amid the pandemic. The engagement of SMEs in commercial loans has also boosted market growth during the pandemic. Additionally, banks have witnessed an increase in demand for commercial loans as most businesses have required additional financing. These factors have supported the growth of the market during the pandemic stress.
Commercial Loan Market Segments
The report has segmented the commercial loans market into several segments based on type, organization size, vendors, and regional analysis.
- By type, the unsecured sub-segment is expected to hold a dominant market share and generate revenue of $15,647.8 billion during the period 2021-2028 owing to the growing preference among businesses for unsecured loans to to help them develop their business. Additionally, unsecured loans offer lower interest rates and easy access to credit. Additionally, unsecured loans are ideal for small businesses that lack the resources to secure secured loans and other types of traditional loans. These factors are estimated to propel the growth of the sub-segment by 2028.
- Based on organization size, the SME sub-segment is expected to have the fastest growth rate of 16.9% CAGR over the years of analysis. The number of SMEs in the world has increased significantly in recent years and the easy access to unsecured loans and those offered by banks is stimulating several startups and medium-sized companies. The increase in government initiatives to facilitate commercial loans and unsecured loans to SMEs is also beneficial for start-up businesses. These factors are expected to boost the growth of the sub-segment by 2028.
- By region, the commercial loan market in Asia-Pacific region is estimated to witness better growth opportunities and exceed USD 7,081.9 billion by 2028 owing to the increasing number of SMEs in this region. Moreover, the increase in technological advancements such as blockchain, artificial intelligence, and machine learning in this region is also expected to enhance the development of the market in the Asia-Pacific region during the forecast period.