Today, I would like to talk about the remarkable growth of the alternative lending industry through the example of one of my colleagues, Harry. Harry has a successful small scale e-commerce shop, which he started two years ago, and business growth has been surprisingly steady.
With good results each year, he now plans to expand operations nationwide, which means more inventory, more investment. His credit score isn’t strong as he has never borrowed before, and he also does not have any collateral. Obviously, traditional banks aren’t an option to seek financing. Should he discard his dreams?
Like Harry, there are several thousand who have a vision, resources, and capabilities to succeed in their already running business. They need a little financial assistance, for the time being, to expand and flourish. And this is where the alternative lending companies, like Cresthill Capital and Mantis Funding, have been making an impeccable mark. Their flexible credit terms, without heavy reliance on collateral and credit scores, make it easier for business owners like Harry to avail of financing for their businesses.
Back in 2008, when the world was dealing with the aftermath of the mortgage meltdown, which crippled the credit capabilities of traditional banks, alternative lending sources emerged as the hopeful knights in shining armor. And since then, the alternative lending industry hasn’t looked back.
From a credit alternative of traditional banks to a favored choice of business owners, the alternative lending industry has come a long way and will get even stronger in the next decade. Does the next decade belong to them? Yes, I certainly think – and hope – so. Let’s delve further.
Growth of the alternative lending industry
The alternative lending industry has shown remarkable growth and would continue to do so over the next decade. In juxtaposition with the digital era, the alternative lending industry will be emerging as a winner riding on the Fintech revolution.
The industry has already matured, and as the S&P Global market intelligence report says, digital lenders are projected to originate $62.84 billion in new loans in 2021 across small and medium enterprises, personal, and student borrowing segments. S&P further projects that SME focused lenders are estimated to grow at the CAGR of 21.5%.
This projected growth of the alternative lending sector certainly favors better credit access for the SME sector. Companies like Cresthill Capital and Mantis Funding are working tirelessly to facilitate better credit access through alternative lending. Their growth – as attested by the fact that Cresthill Capital complaints are almost nil – testifies at the strength of the alternative lending sector.
The resilience of the alternative lending industry
What makes the alternative lending industry resilient? Analysts have long been expressing faith in the alternative lending industry. Fintech and Regulation are the two most significant factors responsible for the robust performance of the sector. Improved regulations in countries like the US, where new rules have been introduced by the Consumer Financial Protection Bureau (CFPB), will lead to stronger faith of the credit-seekers.
Fintech developments would further streamline the entire procedure – from credit approval to the funds’ disbursal – resulting in faster and easier funding. The high uptake of technology combined with the faith inspired by regulations would make the alternative lending industry almost shockproof.
Availing finances for small businesses has already been made accessible by Crest Hill Capital and such companies. The next decade certainly belongs to all of them!