The financial services sector is undergoing groundbreaking change. The prime drivers behind what can be considered a seismic shift include digital and technological advancements and the growth and impact of new Fintech companies.
It used to be the case that the only path open to business owners in need of loans was the traditional financial institution network. Today, the business loan landscape is quite different. It’s thanks to the arrival of disruptive alternative finance platforms that use AI and automation to offer entrepreneurs and startups a whole new set of truly alternative business loan possibilities.
How AI and Automation Have Streamlined the Business Loan Application Process
Applying for traditional loans invokes lengthy waiting times and inaccurate evaluations, which all too often lead to refusals. Such delays and failures are very frustrating. The new, alternative AI-driven, automated business loan platforms have done away with all that. The process is accelerated thanks to the use of:
Advanced Optical Character Recognition (OCR) technology.
Hi-tech algorithms that automatically decipher and verify financial documents and bank statements.
Advanced analysis of Big Data offering additional financial insights into creditworthiness.
Now, instead of weeks, business loan applications can be processed in minutes and result in fairer outcomes.
What the Business Loan Landscape Will Look Like in the Future
As existing alternative finance platforms continue to evolve and automation, digital analysis, and advanced algorithms continue to develop, an even greater number of businesses will turn away from traditional lending to embrace new-wave finance. We will see more instant loans that are tailored to each business’s unique needs and requirements.
By remaining current with new trends in the ever-evolving business loan environment, entrepreneurs and SMEs will be able to better position themselves to access the funds they need quicker and cheaper than ever.
Comparing the Alternative Business Loan Sectors in Germany, the Netherlands, and New Zealand
The digital, alternative business loan landscape is changing all over the world, but in this article, we are focussing on three countries in particular – Germany, the Netherlands, and New Zealand. Let’s start by taking a look at the business loan options available in all three.
| Germany | Netherlands | New Zealand | |
| Angel Investments | Yes | Yes | Yes |
| Asset-based lending | Yes | Yes | Yes |
| Crowdfunding | Yes | Yes | Yes |
| Invoice Finance | Yes | Yes | Yes |
| Merchant Cash Loans | Yes | Yes | Yes |
| Microloans | Yes | Yes | Yes |
| P2P (Peer to Peer) | Yes | Yes | Yes |
| Venture capital investments | Yes | Yes | Yes |
Now, we examine the state of business lending in each of the three countries a lilt deeper/
Digital Lending Trends in Germany
The German government recognises how important alternative loans are for SMEs and has initiated several programs to assist them. They include grants, loan guarantees for lenders, subsidies and tax advantages to help and incentivise entrepreneurs and companies.
Emerging trends in the German business loan sector include a rise in the number of blockchain-based crowdfunding platforms and impact lending and revenue-based loan options.
The value of the alternative business loan sector in Germany reached US$5.68 billion in 2023 and is forecast to be worth US$9.03 billion by 2028.
Digital Lending Trend in the Netherlands
The Dutch government provides various subsidies and schemes to assist entrepreneurs and SMEs. Your chances of success with such assistance will be improved if your company goals align with governmental preferences, such as employing people with disabilities, having innovative ideas and products, and pursuing international business. For more information, refer to the subsidy and funding guide issued by the Netherlands Enterprise Agency (RVO).
The size of the alternative business loan market in the Netherlands was expected to grow by 13.2%, reaching US$6.92 billion by the end of 2024, according to the Business Wire website. It is predicted to continue growing at an average 8.8% CAGR up to 2028, when it is estimated it will be worth US$9.71 billion.
Digital Lending Trends in New Zealand
New Zealand has several government grants or funding schemes available for the self-employed and new business startups. If you qualify, you might have to match any funding you get yourself. Your Regional Business Partner can assist in finding suitable grants. Examples of government-sponsored schemes include the Callaghan Innovation and the Work and Income Initiative.
Platforms like businessloan.nz are fast gaining popularity in the alternative business loan sector, offering a fast application process (10 minutes), quick access to small business loans from $5k to $150k, business loan plus contracts from $150k to $500k, and lines of credit up to $500k, Other platforms include Funding Options, HomeSec, Lend, LoansOne, and many more.
According to recent research, the digital alternative lending market in New Zealand is set to continue growing at a rate of 10.1% per annum through 2027, thanks to the increasing demand from the business population.
Concluding Observations
The digital revolution in all aspects of the virtual world marches on, and in some market sectors, like the business loan arena, it is user-driven, and it’s set to accelerate. In 2022, the size of the global alternative financing market sector size was estimated at USD 10.82 billion in 2022. A CAGR growth rate of 20.2% is forecast by 2030. The gathering momentum is there for all to see.