Alternative Lending Industry Update - SEPT 2020
By Sean Connolly, VP Corporate Strategies
September 30, 2020
The financial landscape is evolving. At a time when many industries are experiencing a slowdown due to the pandemic, the global alternative finance market is on pace to grow by $183.8 Billion USD (!) between now and 2024, according to the latest market research from Technavio. How? Primarily through the increased usage of P2P lending, but crowdfunding and invoice trading will also see growth.
P2P Lending, or Peer to Peer Lending, enables individuals to obtain loans from other individuals, rather than financial institutions. Rates are often better than traditional, regulated bank rates for borrowers with good credit, and worse for those with poor credit. Lenders do not receive an equity stake for their money.
By now, you have probably heard of Kickstarter. They've had several campaigns gain viral attention. Kickstarter is a crowdfunding platform. Crowdfunding is the utilization of a small amount of capital from a large number of investors. Unlike P2P Lending, these investors are given an equity stake in exchange for their money.
Invoice Trading is when businesses sell their individual invoices to an online community of investors in order to free up cash, rather than waiting for the invoice to be paid. These transactions are completed on Invoice Trading Platforms.