Growth Of Small And Medium-Sized Businesses Propels Expansion Of The Alternative Finance Market Emerges as a Core Driver of the Alternative Finance Market in 2025

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What Is the Expected CAGR for the Alternative Finance Market Through 2025?
The scale of the alternative finance market has expanded dramatically in the recent past. Its evolution is projected to increase from $260.65 billion in 2024 to $316.25 billion in 2025, with a compound annual growth rate (CAGR) of 21.3%. The historical growth can be associated with the upsurge of online platforms and social media, the escalating acceptance of peer-to-peer lending, the increasing utilization of cryptocurrency and blockchain, the enhancement in sustainability and green finance, and the emergence of embedded finance.

What's the Projected Size of the Global Alternative Finance Market by 2029?
The size of the alternative finance market is predicted to undergo massive expansion in the coming years, with the estimation of reaching $676.67 billion by 2029, growing at a compound annual growth rate (CAGR) of 20.9%. The predicted surge during the forecast period can be linked to the escalating number of digitally inclined lenders, the increasing embrace of decentralized finance, wider application of artificial intelligence, burgeoning popularity of initial coin offerings, and a rise in microfinance operations. Predominant trends anticipated in the forecast period are technological breakthroughs, increased use of AI and data analytics, a surge in the adoption of internet-of-things, and the rise of blockchain-oriented alternative lending platforms.

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Top Growth Drivers in the Alternative Finance Industry: What's Accelerating the Market?
The expansion of the alternative finance market is anticipated to be driven by the rising number of small and medium-sized companies. These are firms that fit into specific categories based on factors such as staff size, annual earnings, or assets. The mushrooming number of small and medium-sized businesses is attributable to several factors including crowdfunding, peer-to-peer lending, tax incentives, and corporate growth initiatives. Alternative finance provides these businesses with a varied and accessible range of funding solutions, addressing some of the constraints and hurdles posed by conventional financing methods. For example, the Department for Business and Trade, a UK-based government entity, reported in October 2023 that the number of small and medium-sized businesses had escalated from 5.50 million in 2022 to 5.54 million in 2023. Consequently, the swelling number of small and medium-sized businesses is fuelling the expansion of the alternative finance market.

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What Trends Will Shape the Alternative Finance Market Through 2029 and Beyond?
Prominent organizations active in the alternative finance sector are concentrated on producing one-of-a-kind services like the Short-Term Alternative Finance Fund to solidify their market position. The function of this fund is to focus on private credit assets with less than a year of duration, offering a low-volatility alternative to cash and short-term credit options to institutional investors. For example, in 2024, Legal & General Investment Management (LGIM), a UK-based firm specializing in asset management and investment solutions, initiated its Short-Term Alternative Finance Fund. This fund provides alternative finance to investors in need of low-volatility, short-duration credit options. The fund, a part of LGIM's newly introduced RAIF platform, meets the rising need for liquidity-centered private credit options like trade receivables and asset-backed financing. It targets investor demographics like pension funds and insurers. This step highlights a wider industry transition, showing that institutions are gradually choosing private credit assets over traditional cash reserves, attracted by higher yield potential and efficient risk control strategies.

What Are the Main Segments in the Alternative Finance Market?
The alternative finance market covered in this report is segmented -

1) By Type: Peer-To-Peer Lending, Crowdfunding, Invoice Trading, Other Types
2) By Business Model: Traditional Lending, Alternate Marketplace Lending
3) By End User: Enterprise, Individuals

Subsegments:
1) By Peer-To-Peer (P2P) Lending: Consumer P2P Lending, Business P2P Lending, Real Estate P2P Lending, Marketplace Lending
2) By Crowdfunding: Equity Crowdfunding, Reward-Based Crowdfunding, Donation-Based Crowdfunding, Debt Crowdfunding
3) By Invoice Trading: Invoice Factoring, Invoice Discounting, Supply Chain Financing, Reverse Factoring
4) By Other Types: Revenue-Based Financing, Equity-Based Financing, Asset-Backed Lending, Cryptocurrencies And Blockchain-Based Financing, Initial Coin Offerings (ICOs), Venture Debt Financing

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Which Top Companies are Driving Growth in the Alternative Finance Market?
Major companies operating in the alternative finance market are PayPal Holdings Inc., Rocket Mortgage, Bread Financial Holdings, Coinbase Global Inc., Social Finance Inc., Affirm Inc., LendingClub Corporation, OnDeck Capital Inc., Fiverr International Ltd., Betterment Holdings Inc., Funding Circle Holdings plc, Prosper Marketplace Inc., RateSetter, Wealthfront Corporation, OurCrowd Ltd., Freelancer Technology Pty Limited, FundingKnight, Indiegogo Inc., Landbay Partners Limited, Assetz Capital, Kiva Microfunds, Kickstarter PBC

Which Regions Will Dominate the Alternative Finance Market Through 2029?
North America was the largest region in the alternative finance market in 2024. The regions covered in the alternative finance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

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