In 2024, the alternative lending industry has matured significantly, moving beyond being seen as just a new player in the financial sector. The growth of non-bank lending has gained momentum and demonstrated its staying power in recent years. Various statistics and reports indicate a significant increase in the market volume of alternative finance, showing its steady growth and potential. A report by Grand View Research predicts that the global alt-lending platform market size will reach $14.47 billion by 2030.
One of the key factors contributing to the success of alternative lending is the improvements and expansions in lending products that have been implemented by alt lenders. The introduction of collateral lending, for example, has been particularly beneficial for small- and medium-sized enterprises (SMEs) that often struggle to secure funding from traditional banks due to the risks associated with SME lending. This funding gap has created an opportunity for alt lenders to step in and provide the capital needed for SMEs to grow and thrive.
While collateral lending has been a significant milestone for the alt-lending sector, it is not a one-size-fits-all solution. SMEs are required to have collateral, such as real estate or another asset, which not all businesses possess. As a result, alternative lending also relies on other methods such as factoring, where companies can obtain investments based on the creditworthiness of their buyers. It is the combination of different lending products and services that will drive the success of the alt finance industry.
To continue moving alt finance in the right direction, the focus should be on expanding and improving existing offerings such as collateral lending and factoring, rather than constantly chasing new features and innovations. By broadening the criteria accepted as collateral and enhancing existing services, alt lenders can position themselves as a viable alternative to traditional banks. The key to success lies in offering a range of services that mirror those provided by traditional financial institutions, but in a smarter and more inclusive way.
Alt lending has faced criticism for making abrupt changes or following trends too quickly. However, it has grown and thrived by sticking to what works and focusing on incremental improvements rather than radical changes. By staying true to its core principles and values, alt lending has been able to establish itself as a reliable and competitive alternative to traditional financial institutions. It is this dedication to providing a combination of lending options that will drive the industry forward and ultimately lead to its continued success.
