Netherlands: Alternative Finance Topped €1 Billion in 2018 as Strong Growth Continues

Alternative finance surpassed € 1 billion in 2018 in the Netherlands as sector growth continues, according to a report from Stichting MKB Financiering.

Ronald Kleverlaan, a representative from Stichting and note alternative finance expert, commented on the report:

“The Dutch Alternative Finance market has reached a tipping point and is now widely being accepted as an added value to the SME financing landscape by companies, banks and policy makers. Because of the many different AltFin providers the biggest challenge in the next couple of years will be to educate financial advisors to find the most reliable and best fitted solutions for their clients.”

The Dutch Alternative Finance market has reached a tipping point and is now widely being accepted as an added value to the SME financing landscape #Fintech Click to Tweet

The sector has now “taken a serious position in the SME financing market.” The € 1 billion in funding was provided via crowdfunding, online loans, credit unions and other alternative finance providers of factoring finance. Approximately, 12,939 SMEs benefited from the new form of finance during the year.

The strongest growth was said to be coming from small business loans under € 1 million as Fintech platforms are filling a gap in the market. It is being predicted that a minimum of 1/3 of the loans for SME’s will be provided outside the traditional banking system by 2022.

In 2017, alternative finance was pegged at €676 million thus it grew by 51% versus year prior.

Additionally, the number of companies that received alternative finance in 2018 was 12,939. In 2017 this was 7,316, an increase of 76.9%.

Market segmentation for alternative finance in the Netherlands is as follows:

  • crowdfunding – 23%
  • credit unions – 1%
  • direct lending – 21%
  • SME exchange – 2%
  • non-banking lease – 24%
  • non-banking factoring (29%).

The small business loans of under € 1 million are mainly provided to SMEs with annual revenue of under € 5 million. Like most countries, small businesses provide much of the economic growth and thus this represents an important path for SMEs to access capital.

The total alternative finance volume with loans under € 1 million in 2018 was € 873 million. This was an increase of 50% compared to 2017 (€ 582 million).

The total size of alternative finance for small business customers below the million is expected to rise to € 4.4 billion in 2022. The size of bank lending in The Netherlands under € 1 million is expected to be € 8.3 billion in 2022.

It is estimated that in 2022 around 35% of the total loans for small business customers (<€ 1 million) will come from alternative finance.

The complete research, in Dutch, may be downloaded from www.stichtingmkbfinanciering.nl

Stichting MKB Financiering is a public-private organization founded by the Dutch Ministry of Economic Affairs.

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