DBT Bureau
Pune, 16 August 2024
According to the Allied Market Research report titled “Term Loan Market by Type (Short-term Loans, Intermediate-term Loans, and Long-term Loans), by Interest Rate (Fixed Interest Rate and Floating Interest Rate), and Provider (Banks, Financial Institutions, Credit Unions, and Others): Global Opportunity Analysis and Industry Forecast, 2024-2032,” the term loan market was valued at $576.8 billion in 2023 and is projected to reach $991.2 billion by 2032, growing at a CAGR of 6.2% from 2024 to 2032.
Prime Determinants of Growth
The growing demand for short-term loans, which are easier to obtain as they do not require collateral, leads to considerable growth in the term loan market during the forecast period. Moreover, the emergence of fintech companies and online loan providers, which have made obtaining personal loans more accessible, is expected to drive the term loan market growth in the upcoming years.
Segment Highlights
Based on type, the short-term loans segment in the term loans market is gaining traction. The growing demand for short-term loans, which are easier to obtain as they do not require collateral, is driving the term loan market. This segment is expected to experience considerable growth during the forecast period, as short-term loans provide borrowers with the flexibility to manage their cash flow and finance urgent assets such as accounts receivable and inventories.
By interest rate, the fixed interest rate segment had the largest market share in 2023. Fixed interest rate term loans offer borrowers stability and predictability, as the interest rate remains constant throughout the loan tenure. This provides borrowers with the ability to better plan and manage their finances, as they have a fixed repayment schedule. In times of economic uncertainty or when market interest rates are expected to rise, fixed interest rate term loans can be advantageous for borrowers, as they are protected from potential increases in interest rates. This can lead to significant savings in interest payments over the life of the loan.
Based on the provider, the banks segment held the largest share in the term loans market in 2023, owing to growing demand for long-term financing, particularly for infrastructure projects and home loans. This supply-demand gap in lending, especially for small and medium-sized enterprises (SMEs), is a significant factor driving the growth of the term loan market. The development of financial markets to support financial deepening and improved market efficiency and liquidity has led to a need for more diversified financing modalities beyond conventional bank lending. The term loan market provides an alternative financing option for businesses, contributing to its growth.
Regional Outlook
In North America, the increase in adoption of advanced technologies in the loan process, such as AI and software, which streamline loan operations and enhance the overall customer experience is driving the term loan market growth. In addition, the rise in demand for money to support their daily needs and the growing migration to smart urban cities are contributing to the growth of the market. However, the rise in demand for long-term financing, particularly for infrastructure projects and home loans, which are not adequately met by short-term bank lending is boosting term loan adoption in the Asia-Pacific region. The region’s financial sectors are dominated by short-term bank lending, limiting their capacity to finance long-term investments. This has led to a supply-demand gap in lending, particularly for small and medium-sized enterprises (SMEs), which are crucial for national economic development.
Players
- Bajaj Finserv
- Tata Capital Limited
- Swoop Finance Ltd
- Funding Circle Limited
- Social Finance, Inc.
- Compare The Market Limited
- US Fund Source
- Loans Canada
- Sunshine Loans
- Choose Wisely Limited
The report provides a detailed analysis of these key players in the global term loan market. These players have adopted different strategies such as new product launches, collaborations, expansion, joint ventures, agreements, and others to increase their market share and maintain dominant shares in different regions. The report is valuable in highlighting business performance, operating segments, product portfolio, and strategic moves of market players to showcase the competitive scenario.
Recent Development
In January 2022, Wells Fargo announced plans to offer a short-term credit product that provides amounts up to $500 and can be repayable in three equal monthly installments.
In April 2021, PayPal formed a partnership with FlexiLoans to provide freelancers, women entrepreneurs, sole proprietors, and MSME’s with collateral-free business term loans. PayPal with FlexiLoans aims to offer MSMEs working capital for business expansion, purchasing stock, inventory, and other business-related expenditures.
Key Benefits for Stakeholders
This report provides a quantitative analysis of the term loan market segments, current trends, estimations, and dynamics of the term loan market analysis from 2024 to 2032 to identify the prevailing term loan market opportunity.
The market research is offered along with information related to key drivers, restraints, and opportunities.
Porter’s five forces analysis highlights the potency of buyers and suppliers to enable stakeholders to make profit-oriented business decisions and strengthen their supplier-buyer network.
An in-depth analysis of the term loan market segmentation assists in determining the prevailing term loan market opportunities.
Major countries in each region are mapped according to their revenue contribution to the global market.
Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
The report includes an analysis of the regional as well as global term loan market trends, key players, market segments, application areas, and term loan market growth strategies.
Term Loan Market Report Highlights
By Type
Short-term Loans
- Intermediate-term Loans
- Long-term Loans
By Provider
- Banks
- Financial Institutions
- Credit Unions
- Others
By Interest Rate
- Fixed Interest Rate
- Floating Interest Rate
By Region
- North America (U.S., Canada)
- Europe (France, Germany, Italy, Spain, UK, Rest of Europe)
- Asia-Pacific (China, Japan, India, South Korea, Australia, Rest of Asia-Pacific)
- LAMEA (Brazil, South Africa, Saudi Arabia, UAE, Mexico, Rest of LAMEA)
Key Market Players
Sunshine Loans, Funding Circle Limited, Bajaj Finserv, Rupee Station Pvt. Ltd., Tata Capital Limited, Cashpal Super Fast Same Day Loans, Swoop Finance Ltd, BankBazaar.com, US Fund Source, Compare The Market Limited, Loans Canada, Choose Wisely Limited, Social Finance, Inc.
