Non-bank lenders vs Standard bank loans

The decision to take a business loan for small businesses? First, you must decide who to approach. This is a quick guide to the advantages and disadvantages of traditional lenders and Non-Bank lenders.

First of all, small business financing is usually a good option for business owners:

• With a clear roadmap for expansion or a clearly-defined short-term objective
• Who will be able to pay the loan
• Know the terms and conditions associated with the loan. Your adviser or broker is there to help if you have any questions.

If you’re willing to invest in inventory, new equipment or technology or staffing, additional training, renovation or new premises that will take your company to the next level, then you might want take a look at the advantages and disadvantages of taking on the traditional loan from a bank versus taking on a Non-Bank lender.

Bank or online lender?

Credit from banks

The brand reputation of a long-established bank can be considered solid or secure in the sense 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 lengthy and complicated, and require a level of paperwork that some small businesses owners may be constrained in time to fulfill. The process might 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 loaning, the situation is becoming better.

As is the case with any type of loan the chance of lower interest rates will need to be considered along with attributes of the loan product in order in order to select the best type of loan. As for the lender Traditional bank loans may have strict criteria and cumbersome applications processes and may not be flexible.

With cash flow so critical to the survival of many small businesses, the difference between a loan today that could be used to fund the sale of stock in the next day, and a loan in the next month when the seasonal demand is gone, could be the difference between a successful or unsuccessful business.

Non-bank or online business loans

A credit score that is strong and solid security are usually essential for a bank loan, Non-Bank lenders might be more flexible in their approach. They could also be more flexible in structuring loans.

Non-bank lenders are typically more digitally innovative than banks, so the applications may be completed and approved swiftly, and the funds can be made available by the next day, upon approval.

You’ll still have to provide details of what the loan is intended for along with your business’s nature and past history, as well possibly providing security for larger loans, however, since a thorough business plan as well as a lengthy application aren’t required in every deal, the process could be more quickly.

Attention: Relationships, red flags and payments

If you have a strong relationship with a bank manager or an additional lender, you might discuss the lending process and their application. Your broker may guide you through the various requirements of lenders.

Many newer and non-bank lenders operate exclusively online, some lenders like can assign a expert to guide you through the process of applying and truly get to know your business’s needs.

If you’re considering Non-Bank lenders take a look at independent reviews. If the offer you’re considering seems too promising to be true, such as getting pre-approval prior to you’ve even applied or the lender seems extremely aggressive in their approach think about speaking with a broker or adviser and examining the details before signing up.

When borrowing from a bank or a Non-Bank lender, it is important to be aware of the terms of the loan and realistic about whether you’re able to make the obligations. A key consideration may be making a list of the rules you’ll need to follow when deciding whether business loans should be used to help your business thrive and to handle seasonal ups and downs and cash flow fluctuations, to make the most of opportunities to buy stock in massive quantities, or to pay for everyday expenses and operational costs.