Business finance can be obtained from both bank and non-bank lenders. Whether your business needs a financial solution to fund day-to-day operations, fuel growth or smooth over some disruptions to cash flow, you might be considering which source of financial support would be more beneficial for you and your needs.

In recent years, non-bank lending has become more prevalent across industries, with specialists such as our team here at ScotPac providing tailored and flexible business finance for a range of small and medium sized enterprises.

What is a Non-Bank Lender?

A non-bank lender is pretty much exactly what it sounds like: It’s a financial institution that provides funding for lending solutions outside of the traditional, established banking system. 

There is still a wide variety of different types of lenders including online institutions, peer-to-peer lending platforms, private equity and alternative financing providers.

We’ll break down the benefits of opting for non-bank lending solutions in more detail next, but in summary, businesses often turn to non-bank lenders for the greater speed, flexibility and risk appetite than traditional banks can offer.

Benefits of Securing Business Finance through Non-Bank Lending

1. Quicker approval process

For various reasons, such as the need to compete in the market and the greater willingness to take on higher risk, non-bank lenders offer more streamlined and efficient approval processes.

Unnecessarily lengthy paperwork and overly bureaucratic procedures can slow down the approval process with a traditional bank. Financial institutions that are not banks are able to make faster decisions with less cumbersome procedures which means your business will be able to access their line of credit or cash infusion sooner rather than later.

2. Flexible Terms and Conditions

Banking institutions have strict criteria when it comes to both eligibility and terms and conditions. Non-bank lending allows for greater flexibility across all aspects of a loan or financial facility. Whether it’s the loan structure itself or the conditions of repayment, the adaptability that can be offered from a non-banking institution allows for financial solutions that are more specifically targeted to suit a business’s needs, more strategic in completing the financial and cash flow management needs of the borrower, and more personalised terms and conditions that work for both parties.

3. Greater accessibility for small businesses

Large enterprises and conglomerates generally do not find obtaining finance from traditional banks too difficult. With established creditworthiness and more assets at their disposal for use as collateral if required, they are able to access business finance with greater ease. For a small business, the challenge of being able to access finance from traditional banks and lenders is more significant. Non-bank lending allows small and medium sized enterprises with greater accessibility as they are more willing to work with and lend to businesses that may represent higher risk. If your small business is looking to grow and develop, a non-bank lender could offer financial options that otherwise would have been out of reach.

4. Innovative financial solutions

Non-bank lenders often offer innovative financing solutions that can be invaluable in non-traditional ways for small and medium sized businesses to access much needed working capital. Invoice finance, as an example, allows businesses to unlock the otherwise inaccessible funds in their customers’ outstanding invoices ahead of account settlement. These customisable and flexible financial facilities can be tailored to the unique circumstances and needs of a particular business–an offering traditional bank lenders often cannot compete with.

5. Less Stringent Eligibility Criteria

Typically, a traditional bank will have stricter eligibility criteria for a business looking to apply for a loan or business finance. Non-bank lenders, on the other hand, have more relaxed requirements and are more willing to take on increased risk. This allows a greater variety of businesses to access financial facilities. Whether your business is small or large, in its early stages or looking to grow rapidly, non-bank lending demands distinctly less eligibility criteria to be met.

6. Better Customer Service

Non-bank lenders often pride themselves on offering not just customised financial solutions but also personlised customer service. Working closely with their clients as partners, rather than transactions, non-bank lending institutions such as ScotPac can better understand the unique challenges and identify the special opportunities facing clients to offer a more flexible, better catered financial solution that will suit their specific needs.

7. Diverse Funding Sources

Traditional banks rely heavily on deposits as their source of funding. Non-bank lenders, on the other hand, often have more diverse funding sources. This diversity and strength in funding source spread can enhance the lender’s ability to provide business finance. As the client, you’ll have a greater chance of securing funding knowing that your lender is not solely or exclusively dependent on a single source of capital itself.

8. Adaptability to Industry Trends

Banking institutions are by and large significantly more established and immobile when it comes to adaptability. While all financial institutions are required to change with the times–whether that’s adapting to more competitive lending markets or the embrace of new and emerging technology–non-bank lenders are both more attuned to industry trends and market shifts and more agile in being able to respond. This gives them greater capacity to capitalise on new opportunities and stay ahead of the (banking) competition in a rapidly changing business environment. For you, as the client, it means better service, more tailored business finance solutions and an overall enhanced experience.

ScotPac – your local non-bank lending business finance provider

Securing business finance from a non-bank lender can open a world of opportunity for your business. Faster processes, greater flexibility and more personalisation all add up to increased accessibility to the working capital you need to take your business to the next level.

While banking institutions certainly offer benefits in their own right and play an important role in the financial industry, working with a local non-bank lender is a great alternative for small and medium enterprises in particular.

At ScotPac, the largest non-banking institution in Australia and New Zealand, we’re big enough to be trusted but small enough to remain personal. Our offices across the country are staffed by lending specialists who take great pride in diving into the breadth and depth of our financial offerings and services to provide clients the right facility and solution for them.

If you’d like to experience the benefits of working with a non-bank lender today, give us a call on 1300 177 485