The word ‘Fintech’ was coined in the late 1990s. It’s the joining of two words – ‘finance’ and ‘technology’, and it’s one of the prime drivers behind the continually changing landscape of the global business and private lending markets. However, although it’s one of the main drivers, Fintech is not alone. In this article, we delve into digital tech in its broadest context in the loan industry, the effect it’s had on the global business lending scene, with a focus on South Africa, the UK, and the USA, and what we might expect in the future.
Overall View of the Global Business Loan Landscape
According to a report by the Business Research Company, in 2024, the global business loan sector was worth £ 9,143.91 billion. That’s £660.73 billion more than the £8,466.20 billion recorded the previous year in 2023. It represents a CAGR (compound annual growth rate) of 7.8%. Using the same CAGR figure, by 2028, the world business loan sector is forecast to be worth £12,316.76. (All figures converted from $ to £ using a rate of $1 = £0.81 as at the time of writing).
The Key Trends Driving the Projected Increase
In calculating the forecast increase in the 2028 loan total, several different drivers have been taken into consideration. They are:
- Investment in alternative lending platforms in order to increase profit margins.
- The adoption of new digital technologies to speed up loan application approvals, thus heightening customer satisfaction.
- Focussing on participation lending (loans issued by several lenders to one borrower) to lessen risk and boost profitability.
- The increasing use of LAAS (lending as a service) sites.
- The broader use of AI.
South Africa Business Loan Statistics 2024
Within the South African business landscape, SMEs account for 91% of registered businesses and employ 60 % of the working population. All in all, they contribute up to 34% of the country’s GDP. In 2025, it is expected that several critical trends will influence the path of their SMEs, which are in a position to play a significant and pivotal role in growing South Africa’s economy and development in the near future. They are:
- The expansion of eCommerce and the use of Fintech platforms offering alternative financing options.
- Easy access to alternative lending initiatives.
- The incorporation of AI and advanced algorithms within LAAS platforms.
- Greater opportunities for collaborating and networking.
In 2025, the Bureau of Economic Research in South Africa is projecting an economic growth of 2.2%, and with the S&P’s positive revised forecast for South Africa, the country’s small business owners could see economic growth as much as double when compared to 2024.
UK Business Loan Statistics 2024
In the UK in 2024, SMEs applied for over £499 million worth of funding. The most common amount sought after was £10k, and one of the main reasons (43% of all applications) was to boost cash flow. The majority of these types of loans were requested urgently. 21% of loans were for increased productivity, while 11% were to fund the purchase of stock or raw materials.
According to the Gov.uk website, there are over 5.7 million SMEs, and they are deemed to be the engine driving the overall growth of the UK economy through innovation, increased productivity (52% or £2,330 billion), employment (SMEs employ 61% of the UK private workforce), and seeking innovative solutions.
Traditionally, businesses that required loans approached the British bank network. But with the rise of the internet and advanced algorithms, many entrepreneurs and companies are turning to new, alternative finance online platforms.
USA Business Loan Statistics 2024
In the previous fiscal year, the SBA (Small Business Administration) provided small businesses with loans worth a total of $37.8 billion. Of course, the SBA is only one source of business financing; there are others, including online lending platforms and FinTech organizations, and it’s these initiatives that are transforming the small business lending sector in the US. In 2024, the overall small business statistics are as follows:
- Quantity of loans issued – 24 million.
- Sum total of loans issued – $600 billion.
- Average amount per loan – $25,000.
- Approval rate of loan applications – between 60% and 70%.
- Repayment success rate – between 80% and 90%.
Alternative lending platforms use alternative methodologies for credit rating. They use factors such as cash flow, plus presence and feedback from social media platforms. This more holistic approach allows lenders to better evaluate the creditworthiness of small businesses that have less trading history. It’s a significant factor in the increase of successful loan applications.
Concluding Thoughts on Tech-Driven Business Loans
Digital lending is not only here to stay, but the alternative landing platforms it has created are going to continue to grow as the first-choice option for many existing and new businesses. The advantages these platforms offer include:
- The rapid turn round of loan applications.
- Greater transparency – less strict terms and conditions, fewer or no hidden clauses, and more competitive interest rates.
- Flexibility – alternative credit rating processes widen the scope of loan application success and easier access to unsecured loans
- 24/7 customer service
Financial gurus, KPMG, have suggested that digital lending could dominate the unsecured business loan market within the next decade. Companies and entrepreneurs that recognise and welcome this shift are likely to be better positioned to capitalize on the opportunities that tech-driven business loans open up.