Non-bank lenders versus Standard bank loans

What is the best way to choose a small-business loan? First, you must decide who to approach. Here’s an easy guide to the pros and cons of traditional lenders and Non-Bank lenders.

First , small-scale business financing usually suits business owners:

• With a clear roadmap for expansion or a clearly defined time-frame
• Who is able make the payments
• You are aware of the terms and conditions associated with the loan. Your adviser or broker will be there to assist you if you have any questions.

If you’re willing to make an investment in inventory, brand new technology or equipment or staffing, additional training as well as a renovation or new building which could help take your small business to the next level, then you might want to weigh the advantages and disadvantages of taking on traditional bank loans versus dealing with an Non-Bank lender.

Are you a bank or an online lender?

Lending from banks

The reputation for a brand of long-established bank is considered safe or solid as could the feeling of security – in New Zealand banks are registered with the Reserve Bank of New Zealand and fall under the same regulations.

The process of applying for bank loans could be long and complex, and may require a large amount of paperwork that small business owners are limited by time constraints to meet. The process might be speedier when the lender has digital access to your financial records while banks aren’t usually recognized for their data-savvy approach to small-business loans, their capabilities are becoming better.

Similar to every type of lending there is a possibility of lower interest rates may need to be considered along with characteristics of loan products to decide on the most appropriate kind of loan and lender conventional banks could have strict guidelines and lengthy application procedures, and lack flexibility.

With cash flow being so vital for the survival of many small-sized businesses, the distinction between a loan today that could be used to fund the sale of stock in the next day, and a loan in the in the next month when seasonal demand is gone, could be the difference that makes or breaks a business.

Non-bank or online business loans

When a solid credit history and solid security are usually essential for a bank loan, Non-Bank lenders may be more flexible with their approach. They also may be more flexible in structuring loans.

Non-Bank lenders are generally more technologically advanced than banks, meaning the applications may be processed and approved quickly with funds made available within the next day, upon approval.

You’ll still have to explain what the loan is intended for, your business type and its history, as being able to provide security for loans that are larger, however, since a thorough business plan as well as a lengthy application aren’t always part of the arrangement, things can move quicker.

Attention: Relationships, red flags, and repayments

If you’ve established a solid relationship with a bank manager or an other lender, you may talk to them about their application and lending process. If not, your broker could help you navigate the different lending requirements.

Many newer and non-bank lending institutions operate entirely online, some lenders like can provide a dedicated loan advisor to help you through the application process and truly get to know the requirements of your company.

If you’re considering Non-Bank lenders take a look at independent reviews. If you think an offer is too appealing to be true like the pre-approval you receive before you’ve even made an application, or the lender is extremely aggressive in their approach take a look at speaking with an adviser or broker, and investigating further before signing up.

If you’re borrowing from a bank or a Non-Bank lender, you’ll need to be clear about the conditions and be realistic about whether you can meet the payments. One of the most important considerations is creating a set of rules for yourself when deciding whether the business loan should be utilized to help your business thrive in managing seasonal fluctuations and fluctuations in cash flow, or to benefit from opportunities to purchase inventory in large quantities, or to fund day-today operations and costs.