industry spotlight

Commercial Lending

Tap into the commercial lending industry, where customized loan products and cutting-edge credit analysis transform business financing and economic growth.

Rethinking financing in business

The commercial lending industry thrives on digitization. Client demand for faster online loans, booming SMEs, and favorable economies fuel its growth. Tech streamlines applications by automating document verification and credit checks, transforming traditional loan models. The industry is a hotbed for both startups and investors, as it is projected for further growth in the coming years.

Why it matters:

While VCs recognize the industry’s digital impact and profitability potential, commercial lending startups are free to innovate in:

  • AI and ML for loan approvals
  • Blockchain-based lending platforms
  • Embedded finance solutions
  • Fraud detection systems

Between the lines:

Although the commercial lending industry has significant growth potential, there are challenges, including problems with trust, regulations, and competition.

With vast experience helping commercial lending startups, our Waveup expert team knows what makes companies succeed and shine for investors

$3B+
Secured investments
600+
Ventures assisted
80+
Fields scrutinized

What we do:

We assist in securing the necessary venture capital, creating persuasive and insightful commercial lending pitch decks and solid business models, and pinpointing the most beneficial M&A opportunities.

Go deeper:

Look through our commercial lending market research to discover the latest trends, key industry insights and challenges, and the cheat codes to attract investment.

2x growth
By 2032, the global commercial lending sector is expected to double in growth.

 

5/10
Businesses prefer online loan applications.

Driven by favorable economic conditions and a growing appetite for alternative lending solutions
75%

Businesses prefer loan products with flexible repayment options to manage cash flow effectively.

65%

Lenders expect to use AI by 2025 for credit scoring, fraud detection, and loan portfolio management.

6/10

Banks report a rise in ESG loan inquiries.

VENTURE LANDSCAPE

In 2023, startups in the commercial lending industry raised $0.105 billion in funds

Key verticals where funds flow:

  • Equipment leasing
  • Real estate development
  • Small business loans
  • Manufacturing loans

Leading commercial lending venture capital firms

Write to us to know more

Commercial lending industry challenges

Navigate commercial lending startup pitfalls armed with best practices.

Regulatory compliance:

The commercial lending industry faces numerous regulations and compliance with constantly evolving rules and guidelines consumes a lot of time and effort.

Why it matters

Difficulties with regulatory compliance may lead to:

  • Financial losses due to penalties and fines
  • Increased administrative burden and compliance costs
  • Potential damage to brand reputation and loss of customer trust

What it takes:

  • Employ dedicated legal and compliance teams to stay up-to-date with regulations
  • Invest in commercial lending technology to streamline compliance processes
  • Develop strong risk management and ongoing monitoring systems

Market volatility:

Market volatility hinders commercial lending startups’ ability to assess creditworthiness and price loans effectively. Predicting a borrower’s financial health in a fluctuating market is also difficult.

Why it matters

Market fluctuations may lead founders and businesses to:

  • Increased loan defaults and reduced repayment capacity
  • Reduced loan demand and profitability
  • Potential liquidity crisis and heightened market volatility

What it takes:

  • Diversify the loan portfolio to minimize exposure to specific industries
  • Conduct stress tests and scenario analysis to assess risks under different economic conditions
  • Enhance risk management practices and build capital buffers to absorb potential losses

Securing funding:

Newcomers without an established track record struggle to secure funding because they are considered high-risk.

Why it matters:

Insufficient funding usually leads to:

  • Problems with scaling operations
  • Inability to invest enough in R&D

What it takes:

  • Prepare a pitch deck that tells the story of your product in a smart yet simple way
  • Develop a robust business plan, including market analysis, potential customer base, and a roadmap to growth
  • Build strategic partnerships for strengthening your venture’s credibility

 

Technological adaptation:

Although tech progress enables faster loan approvals and innovative data-driven products, it requires continuous adaptation to ensure security and accuracy in loan assessments.

Why it matters:

Disrupted tech advancements might cause:

  • Loss of market share
  • Inefficiencies in loan origination and servicing processes
  • Customer dissatisfaction

What it takes:

  • Invest in modern loan origination systems and digital platforms
  • Partner with fintech firms to leverage their expertise and technology
  • Develop responsive customer service channels using chatbots, online portals, and mobile apps

FAQs

How attractive is the industry to potential commercial lending investors?

The commercial lending industry attracts investors due to steady income from interest and fees and opportunities for new market ventures. However, rising default rates and regulatory uncertainties may cause some caution.

If you are a commercial lending startup, how easy is it to raise funds today?

Fundraising for commercial industry startups is not easy. Investors may be cautious about investing in new and unproven lending businesses. In addition, competing with well-established financial institutions and alternative lenders for funding can be challenging, as they already have a strong market presence and track record.

How long does it take to create a pitch deck and financial model for a commercial lending startup?

We typically finish everything in two to three weeks. However, during busy periods it could stretch to a month. Please reach out to us for more detailed information.

What are the key mistakes in pitch decks in commercial lending startups?

The main problem is the absence of an investment story that connects all the slides together. Showing only graphs, numbers, and charts isn’t the best way to secure funding. Investors will feel bored and skip to a more appealing project with a persuasive narrative, a solid competitive moat, significant traction, a solid business plan, and a unique value proposition. Thus, ensure that you have all this in your deck.

How competitive is the commercial lending market?

The commercial lending market is a battleground. Many potential borrowers, financial institutions, and non-bank lenders are competing for market share. Attractive interest rates and terms also contribute to market saturation.

What services do you provide for investors looking to invest or already investing in the commercial lending sector?

We help investment funds conduct thorough due diligence on promising commercial lending projects and offer complete fundraising support to their portfolio companies.

Do you provide commercial lending startup M&A support?

Absolutely! Whether you need help pinpointing M&A perspectives, creating coherent CIMs, or crafting models for buy-side and sell-side deals, we are always at your service.

Do you make intros to commercial lending startup VCs?

We link you with commercial lending venture capitalists, assessing your team, product, and funding goals, and guide your engagements with VCs for successful relationships throughout and beyond negotiations.

Do you have data or research available to purchase on the commercial lending market?

Our team provides tailored market insights for the commercial lending industry, including competitor evaluations and extensive market research. Utilizing reliable data, we help you navigate the industry’s landscape, identifying challenges, opportunities, and competitive dynamics.

Which growth stage of companies have you worked with in the past?

Our core competency is guiding you from the Seed to Series B funding stages. However, we also support companies in pre-Seed and Series C+ growth stages, helping them forge ties with established companies and investment funds.

Building a solution in the commercial lending industry? Get in touch with us

Fuel your next stage of growth with Waveup—your one-stop shop for fundraising support, outsourced M&A advisory, growth strategy consulting, and presentation design. Leave your email, and let's chat!

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