Non-bank lenders vs Standard bank loans

Posted on: 12 Oct 2024 at 09:49 am

Choosing a small business loan? First, you must decide who to apply with. Here’s a brief guide to the pros and cons of traditional lenders and Non-Bank lenders.

The first thing to consider is small-business finance is typically a great option for business owners:

  • With a clear plan for expansion or a clearly defined short-term objective
  • Who will be able to pay the loan
  • Know the terms and conditions with the loan. Your advisor or broker is available to assist you if you have any questions.

If you are ready to make an investment in the inventory, new technology or equipment as well as additional staff, training or renovation, or even a new location that will take your company to the next level If so, you may want to consider the advantages and disadvantages of taking out the traditional loan from a bank versus dealing with an Non-Bank lender.

Bank or online lender?


Credit from banks

The reputation of a long-standing bank can be seen as solid or safe as could the feeling of security – in New Zealand banks are registered with the Reserve Bank of New Zealand and are subject to the same rules.

The loan application process for bank loans can be long and complex, and will require a certain amount of paperwork that some small entrepreneurs may be restricted by time to meet. The process can be speedier when the bank has electronic ability to access your personal financial records although banks aren’t widely known for being data-savvy in small-business loans, their capabilities are becoming better.

Similar to all types of lending the chance of lower interest rates may need to be considered alongside attributes of the loan product in order in order to select the most appropriate type of loan. Likewise, lenders - loans from traditional banks might have strict requirements and lengthy application procedures, and may not be flexible.

With cash flow so critical to the survival of many small businesses, the difference between a loan that could fund stock to sell tomorrow, or a loan granted next month after the seasonal demand is over can be the difference between making or breaking.

Online or non-bank business loans

A credit score that is strong and solid security are often required for loans from banks, Non-Bank lenders can be more flexible in their approach. They may also have greater flexibility when it comes to structuring loans.

Non-Bank lenders are generally more technologically advanced than banks, meaning applications are often accepted and processed quickly, with funds made available within the next dayafter approval.

You’ll still have to give details about what the loan is intended for along with your business’s nature and past history, as well as potentially providing security for bigger loans, however, because a comprehensive business plan and cumbersome applications aren’t always part of the deal, the process could be quicker.

Heads up: relationships, repayments and red flags

If you’ve established a solid relationship with a bank manager or an additional lender, you might contact them regarding their lending and application process. If not, your broker could assist you in understanding the various requirements of lenders.

Many of the more recent or non-bank lenders work exclusively online, some lenders like can provide a dedicated expert to guide you through the process of applying and really get to know the needs of your business.

If you’re thinking about Non-Bank lenders look into independent reviews. If an offer seems too good to be true or if you get pre-approval before you’ve even applied, or the lender is uncompromising in their approach you should talk to advisors or brokers and looking into the matter before signing on.

If you’re borrowing from a bank or a Non-Bank lender, it is important to be clear about the terms of the loan and realistic about whether you can meet the payments. One important aspect to think about is making a list of the rules you’ll need to follow - deciding whether business loans are needed to help your business thrive by coping with seasonal fluctuations, and cash flow fluctuations, to profit from opportunities to purchase stock in large quantities, or to fund everyday expenses and operational costs.

Tags: lenders, loans, non-bank Categories: Business Loans

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