US Micro Lending Market Outlook to 2028

Segmented by Product (Micro-credit/ Micro-loans, Micro-savings, Micro-Insurance, and Remittances and Money Transfer), By End-User (Small enterprises, Solo entrepreneurs & self-employed, Farmers & Agriculture workers, and Healthcare Recipients)

Region:North America

Author(s):Shubham Kashyap

Product Code:KROD215

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Published on

August 2023

Total pages

85

About the Report

About the Report

Market Overview:

US Micro Lending Market is the most dominating region in the global micro-lending market and currently holds a significant share of the overall market. Major growth drivers of the US Micro Lending Market are low-interest Rates, Ease of Access, Technological Advancements, flexible repayment schedules, and Alternative credit score models. The market is expected to grow at a CAGR of 12 % in the forecast period due to different factors affecting the industry.

US Micro Lending Market Revenue

The integration of technology into the US Micro-Lending Market is revolutionizing this market across the country. Micro-finance companies are emphasizing the more and more use of technologies like big data, machine learning, AI (Artificial Intelligence), and blockchain to evaluate clients' creditworthiness, streamline loan disbursal procedures, and reduce the cost of loan servicing. Major players like funding circle, On Deck Capital, and American Express Kabbage are investing hugely in their digital platforms to expand their overall reach.

Ecosystem of Top Players in US Micro Lending Market

The US Micro lending market is highly competitive and dynamic; the market is filled with various players. Both national and international players are active in the US micro-lending market. Some of the major firms present in the US micro-lending market are funding circle limited, On Deck Capital Inc, American Express Kabbage Inc, and Lending Club Bank.

The US micro-lending market is a dynamic ecosystem that is characterised by constant changes, innovations, developments, and adjustments in order to match customer needs and preferences. All the players in the US micro-lending market are offering the same or substitute products or services. This situation creates intense competition as every player tries to differentiate itself, influence clients, and achieve a competitive edge. The dynamic

nature of the market also promotes firms to come up with innovative and new products or services, this is one of the major factors behind growth and success in such a market.

US Micro Lending Market Analysis

  • In 2022, America is dominating the global micro-lending market by occupying a significant amount of share in the industry. The country is leading the micro-lending market as most of the biggest micro-lending companies are located in the country. Currently, the country has more than 2200 micro-lending companies present in the market.
  • In America, the Micro-lending market supports around 4 Mn jobs in remote areas of the country. The US micro-lending market is connected with ~3000 small and medium-sized (SME) enterprises across the nation and provided them with constant financial support through their services.
  • The US micro-lending market is divided into Banks and Micro Finance Institutions (MFIs). Micro-finance Institutions have a massive customer base and large market share in comparison to banks. One of the reasons behind this gap is the huge digital presence of MFIs that enables MFIs firms to attract and influence a larger share of customers.
  • The market is dominated by the players such as funding circle limited, On Deck Capital Inc, and American Express Kabbage Inc. To further strengthen their position in the US micro-lending market all the major players are emphasizing a focus on unique and different financial products or services. Digital reach is a top priority for the market players as digital platforms attract significant numbers of customers.

 

Key Trends by Market Segment:

By Product Type: The USmicro-lending market is segmented into four categories based on the type of product that are Micro-credit/ Micro-loans, Micro-savings, Micro-Insurance, and Remittances and Money Transfer. Out of these four categories, micro-loans are dominating the US micro-lending market. Under micro loans, companies offer short-term loans, emergency loans, and group loans. This particular product type is dominating the market because microloans cover the immediate financial need of individual borrowers or small businesses. These loans can be accessed easily by customers during unexpected expenses or emergencies in a quick process. Micro-loans offer a quick solution to the client’s monetary need that’s why It has the largest market share in the micro-lending market.

US Micro Lending Market Segmentation By Product Type

By Type of End-User: TheUS micro-lending marketis divided into four major categories: small enterprises, Solo entrepreneurs & self-employed, Farmers & Agriculture workers, and Healthcare Recipients. Small enterprises are dominating the US micro-lending market in this segment. The reason behind their dominance in the market is their frequent need for working capital, equipment, or funds to expand their business. These small enterprises can’t approach traditional banks due lack of collateral and no credit history. Therefore, micro-lending companies provide them with micro-loans that help small enterprises to sustain in business. These micro-loans are very crucial for small businesses for sustaining and developing their enterprises.

US Micro Lending Market Segmentation By Type of End-User

By type of Geography: TheUS micro-lending market is divided into four regions: North, South, East, and West. The northern part of the country is having the major market share of the micro-lending market followed by the East, South, and West. States like New York, Boston, and Chicago have a significant population that is driving the micro-lending market of the country.  The northern region is dominating the US micro-lending market as this region has a high demand for small business loans, affordable housing financing, and financial educational programs. MFIs (Micro Finance Institutions) are the best source for users to fulfil their small monetary needs. Additionally, the Northern part encompasses various universities and other educational institutes that drive the demand for microloans for research projects and other educational purposes.

US Micro Lending Market Regional Analysis

Competitive Landscape

The US Micro lending market is highly competitive and dynamic. The market has the presence of both national as well as international players. Some of the major players in the market are funding circle limited, On Deck Capital Inc, American Express Kabbage Inc, LendingClub Bank, Zopa Bank Limited, Biz2Credit Inc., Lendio Inc., Bluevine Capital Inc., Fundera Inc. (NerdWallet), and StreetShares Inc.

The market is expected to witness new entrants in the forecasted as the market is growing significantly. With the arrival of new players in the market variety of products or services, the quality of service, and the number of innovative products will also increase in the market. In the coming years, the preference for digital platforms will also go double as nowadays customers mostly opt for easy access to products or services. The growing influence of digitalization will enable companies to expand their reach internationally.

US Micro Lending Market Ecosystem

Recent Developments:

      • In recent years, the US micro-lending market has reached new heights in terms of expansion and revenue generation. One of the major factors influencing this growth is advancement in technology and Innovation. Frequent development in the technological sector has played an important role in US micro-lending market.
      • The MFIs startups are expanding the market by providing innovative lending frameworks, alternative credit assessment methods, and consumer-friendly digital platforms. These startups have aimed to serve and uplift the underserved population by offering quicker and more accessible lending solutions to them.
      • In 2022, American Express Company announced a suit of financial service products for micro-enterprises. Financing Circle extended its access to capital for Nevada small business proprietors taking after authorization from the state. Additionally, Lendio Inc also introduced a new mobile app to assist small enterprises with features like access, data, and insight into their capital.
      • One of the major players in the market American Express has witnessed huge returns of 70% in the last three years. This shows how the US micro-lending market continues to develop despite the post-pandemic recession.

 

Future Outlook:

The US Micro Lending market is expected to grow at a CAGR of 12 % from 2022 to 2028 with low-interest Rates, Ease of Access, Technological Advancements, flexible repayment schedules, and Alternative credit score models.

        • As the market is anticipated to grow remarkably in the forecasted period thus the demand for microloans will also increase significantly. To match the growing demand micro-lenders are planning to use data analytics and AI (Artificial Intelligence) to tailor lending products to their customers. This help micro-lenders analyses customers' behaviour and lenders will be able to customize terms and repayment schedules that match with clients' financial conditions.
        • The micro-lenders will be planning to collaborate with traditional financial institutions, modern fintech companies, and other monetary organizations to expand their reach and offer different ranges of financial assistance to clients.
        • Micro-lenders are developing financial education and empowerment programs to make their borrowers aware and educated about their products and services. Borrowers with better knowledge and understanding of financial products can manage their loans effectively and efficiently.

The idea of impact investing might gain more recognition in the near future. Impact investing is a situation where investors want both financial return on their investment as well as social or environmental outcomes. Micro-lending firms that gave importance to their social impact will look for more capital from impact investors.

Scope Of The Report

Scope of the Report

US Micro Lending Market Segmentation

By Type of Products 

Microloans/ Micro-credit

Micro-savings

Micro-Insurance

Remittances

By Type of End-User 

Small enterprises

Solo entrepreneurs & self-employed

Farmers & Agriculture workers

Healthcare Recipients

By Region

North

West

South

East

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Products

Products

Key Target Audience – Organizations and Entities Who Can Benefit by Subscribing This Report:

  • Potential Market Entrants
  • Micro Lending Companies
  • Retailers
  • Market Researchers and Analysts
  • Distributors and suppliers
  • finance companies
  • Potential Investors
  • Industry Associations
  • Government Bodies & Regulating Authorities

 

Period Captured in the Report:

  • Historical Period: 2017-2022
  • Base Year: 2022
  • Forecast Period: 2022-2028


Companies

Major Players Mentioned in the Report:

  • Funding circle limited
  • On Deck Capital Inc
  • American Express Kabbage Inc
  • LendingClub Bank
  • Zopa Bank Limited
  • Biz2Credit Inc.
  • Lendio Inc.
  • Bluevine Capital Inc.
  • Fundera Inc. (NerdWallet)
  • StreetShares Inc

Table of Contents

Table of Contents

1. Executive summary

2. US Micro Lending Market Overview

2.1 Taxonomy of the Market

2.2 Industry Value Chain

2.3 Ecosystem

2.4 Government Regulations/Initiatives for the Market

2.5 Growth Drivers of the US Micro Lending Market

2.6 Issues and Challenges of the US Micro Lending Market

2.7 Impact of COVID-19 on the US Micro Lending Market

2.8 SWOT Analysis

3. US Micro Lending Market Size, 2017 – 2022

4. US Micro Lending Market Segmentation

4.1 By Product Type, 2017 - 2022

4.2 By End User 2017 - 2022

4.3 By Regional Split (North/East/West/South), 2017 - 2022

5. Competitive Landscape

5.1 Mergers and Acquisitions, Joint Ventures, Collaborations, and Agreements

5.2 Strategies Adopted by Leading Players

5.3 Company Profiles

5.3.1 Funding circle limited

5.3.2 On Deck Capital Inc

5.3.3 American Express Kabbage Inc

5.3.4 LendingClub Bank

5.3.5 Zopa Bank Limited

5.3.6 Biz2Credit Inc

5.3.7 Lendio Inc

6. US Micro Lending Market Size, 2022 – 2028

7. US Micro Lending Future Market Segmentation

7.1 By Product Type, 2022 - 2028

7.2 By End-User 2022 - 2028

7.3 By Regional Split (North/East/West/South), 2022 - 2028

8. Analyst Recommendations

9. Research Methodology

10. Disclaimer

11. Contact Us

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Research Methodology

Research Methodology

Step 1: Identifying Key Variables:

Ecosystem creation for all the major entities and referring to multiple secondary and proprietary databases to perform desk research around the market to collate industry-level information.

Step 2: Market Building:

Collating statistics on the micro-lending market over the years, penetration of marketplaces, and service providers ratio to compute revenue generated for the micro-lending products. We will also review product quality statistics to understand the revenue generated which can ensure accuracy behind the data points shared.

Step 3: Validating and Finalizing:

Building market hypotheses and conducting CATIs with industry experts belonging to different companies to validate statistics and seek operational and financial information from company representatives.

Step 4: Research output:

Our team has approached multiple US micro-lending companies providing channels and understanding the nature of product segments and sales, consumer preference, and other parameters, which supported us validate statistics derived through the bottom-to-top approach from micro-lending loan providers.

Research Methodology for US Micro Lending Industry