Alternative Lending: the New Norm?

by Brian Riley 0

Square Capital’s loan volumes doubled each year since 2014.  Within 3 years, small business quarterly loan volumes stand at  $320 million.  Square placed nearly $2 billion into the small business market since it began.

Square is not alone.  Top competitors in the space are Paypal and Amazon.

  • PayPal (PYPL) and Amazon (AMZN) are also players in the alternative financing and lending market since they supply small loans to their customers.

  • PayPal and Amazon have each extended between $2.5 billion and $3.0 billion in small business loans since launching their credit operations.

This is the tip of the iceberg.

  • Polsky Center estimates that alternative loan volume was $34.5 billion in 2016, implying that the market expanded by $6.2 billion over the previous year.

  • the alternative lending industry is forecast to grow to about $1.0 trillion in the coming decade.

With all that growth you have to wonder where banks are.  Perhaps Alt Lending is the new norm.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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