CrowdLending (Business) - United Kingdom

The United Kingdom is projected to reach a total transaction value of US$4.27bn in the Crowdlending (Business) market market by 2024.
When compared globally, China is expected to have the highest transaction value, amounting to US$16bn in 2024.
The United Kingdom's CrowdLending market is experiencing a surge in innovative platforms, offering diverse capital-raising opportunities for businesses of all sizes.

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 United Kingdom has experienced significant growth and development in recent years.

Customer preferences: Businesses in the United Kingdom are increasingly turning to crowd lending as a viable alternative to traditional financing options. This is due to several factors, including the ease and convenience of accessing funds through online platforms, the ability to secure competitive interest rates, and the flexibility offered by crowd lending in terms of loan amounts and repayment terms. Additionally, businesses appreciate the transparency and speed of the crowd lending process, as well as the opportunity to connect with a diverse pool of investors.

Trends in the market: One of the key trends in the CrowdLending (Business) market in the United Kingdom is the rise of peer-to-peer lending platforms. These online platforms connect businesses in need of funding with individual investors looking to lend money. This trend has been driven by advancements in technology, which have made it easier for businesses and investors to connect and transact. Furthermore, the regulatory environment in the United Kingdom has been supportive of peer-to-peer lending, which has contributed to its growth. Another trend in the market is the increasing participation of institutional investors in crowd lending. As the market has matured, institutional investors such as banks and asset management firms have recognized the potential of crowd lending as an asset class. This has led to the development of specialized funds and investment vehicles that focus on crowd lending, providing businesses with access to larger amounts of capital.

Local special circumstances: The United Kingdom has a well-developed financial services sector, which has facilitated the growth of the crowd lending market. The presence of established banks and financial institutions has helped to build trust and credibility in the market, attracting both borrowers and investors. Additionally, the supportive regulatory framework in the United Kingdom has created a favorable environment for crowd lending to thrive.

Underlying macroeconomic factors: The development of the CrowdLending (Business) market in the United Kingdom can be attributed to several underlying macroeconomic factors. Firstly, the low interest rate environment in recent years has made crowd lending an attractive option for businesses seeking affordable financing. Secondly, the economic uncertainty surrounding Brexit has led to a tightening of credit conditions, making it more difficult for businesses to access traditional forms of financing. Crowd lending has emerged as a viable alternative for businesses in this challenging economic environment. Finally, the growth of the gig economy and the rise of small and medium-sized enterprises (SMEs) have created a strong demand for flexible and accessible financing options, which crowd lending is well-positioned to provide.

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.