CrowdLending (Business) - Saudi Arabia

The total transaction value in the Crowdlending (Business) market market in Saudi Arabia is expected to reach US$48.54m in 2024.
When compared globally, it is evident that China leads with a transaction value of US$16bn in 2024.
In Saudi Arabia, CrowdLending platforms are gaining popularity as a modern alternative for businesses seeking capital raising opportunities.

Definition:

Crowdlending platforms, otherwise know as lending-based Crowdfunding enable small and medium-sized enterprises to get loans from single or multiple, private and institutional investors via an online brokering platform. On credit platforms such as Funding Circle, OnDeck, Kabbage and Lending Club, businesses can obtain small loans up to a set maximum value. As a rule, financing requests are analyzed by the provider via an internal scoring system and are checked against additional minimum requirements such as turnover. Subsequently, these financing requests can be invested in by private and institutional investors at an appropriate interest rate determined by the credit rating of the company. This makes it possible for SMEs to borrow quickly and easily, as the basic requirements for obtaining finance are more flexible compared to traditional bank loans.

Alternative financing for SMEs and freelancers (bank-independent loans)
Small business loans issued by single or multiple private and institutional investors (non-banks)
Online loan request, scoring and approval

Traditional bank loans
Consumer loans and credit card transactions
Business-to-Business credit scoring and rating services
Online marketplaces for consumer loans (see Marketplace Lending)

The CrowdLending (Business) market in Saudi Arabia has been experiencing significant growth in recent years, driven by several key factors.

Customer preferences: Businesses in Saudi Arabia are increasingly turning to CrowdLending platforms as a source of financing due to the convenience and accessibility they offer. These platforms provide an alternative to traditional lending institutions, allowing businesses to access funding quickly and easily. Additionally, CrowdLending platforms often offer competitive interest rates and flexible repayment terms, making them an attractive option for businesses of all sizes.

Trends in the market: One of the key trends in the CrowdLending market in Saudi Arabia is the rise of peer-to-peer (P2P) lending platforms. These platforms connect individual lenders with businesses in need of financing, cutting out the middleman and reducing costs for both parties. P2P lending has gained popularity in Saudi Arabia due to its transparency and efficiency, as well as the potential for higher returns for lenders. Another trend in the market is the increasing use of technology and data analytics in the lending process. CrowdLending platforms in Saudi Arabia are leveraging technology to streamline the loan application and approval process, making it faster and more efficient. Additionally, data analytics are being used to assess the creditworthiness of borrowers, enabling lenders to make more informed lending decisions.

Local special circumstances: Saudi Arabia has a large and growing SME sector, which is a key driver of the CrowdLending market. Many small and medium-sized businesses in the country face challenges in accessing traditional financing options, such as bank loans. CrowdLending platforms provide an alternative source of funding for these businesses, enabling them to grow and expand. Another special circumstance in Saudi Arabia is the government's push for economic diversification. The country is actively working to reduce its dependence on oil and develop other sectors, such as technology and entrepreneurship. CrowdLending platforms play a crucial role in supporting this diversification by providing funding to innovative startups and small businesses in non-oil sectors.

Underlying macroeconomic factors: The growth of the CrowdLending market in Saudi Arabia is also influenced by underlying macroeconomic factors. The country has a young and tech-savvy population, which is driving the adoption of digital financial services, including CrowdLending. Additionally, the government's Vision 2030 initiative, which aims to transform the Saudi economy, has created a favorable environment for entrepreneurship and innovation, further fueling the demand for CrowdLending. Furthermore, low interest rates in the country have made borrowing more affordable, encouraging businesses to seek financing. The Saudi Arabian Monetary Authority (SAMA) has implemented measures to stimulate lending and support economic growth, which has contributed to the growth of the CrowdLending market. In conclusion, the CrowdLending (Business) market in Saudi Arabia is experiencing rapid growth due to customer preferences for convenience and accessibility, as well as the rise of P2P lending platforms and the use of technology and data analytics. The country's large SME sector, government's push for economic diversification, and underlying macroeconomic factors such as a young population and low interest rates are also driving the market's development.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.