Non-bank lenders vs Typical bank loans

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

First of all, small business finance is typically a great option for business owners:

• With a clear plan for growth or a well-defined time-frame
• Who can make the repayments
• You are aware of the terms and conditions with the loan. Your adviser or broker will be there to help if you have any concerns.

If you’re ready to make an investment in inventory, brand new equipment or technology or staffing, additional training and renovations or even new premises that can take your business to the next level You may want to consider the pros and cons of taking out the traditional loan from a bank versus dealing with an Non-Bank lender.

Are you a bank or an online lender?

Bank loans

The brand reputation of a long-established bank is considered safe or solid as could the feeling of security. New Zealand banks are registered with the Reserve Bank of New Zealand and are subject to the same rules.

The application for bank loans could be long and complicated and will require a certain amount of paperwork which some small entrepreneurs may be restricted by time to meet. The process may be faster in the event that the bank has digital acces to your bank records - while banks aren’t usually considered to be data-savvy when it comes to small-business lending, they are getting better.

As is the case with all kinds of loans, the possibility of lower interest rates might require consideration alongside attributes of the loan product in order in order to select the most appropriate kind of loan and lender Traditional bank loans could have strict guidelines and lengthy application procedures, and may not be flexible.

With cash flow being so vital for the survival of many small businesses, the differences between a loan today that could fund stock to sell in the near future, and an offer for a loan next month , when the seasonal demand is over can be the difference between making or breaking.

Non-bank or online business loans

When a solid credit history and solid security are usually a must-have for the bank loan, non-bank lenders can be more flexible with their approach. They can also tend to be more flexible in the way they structure loans.

Non-Bank lenders are often more digitally innovative than banks, so that applications are sometimes processed and approved in a short time, with funds made available within the next day, upon approval.

There is a need to provide details of what the loan will be used for along with your business’s nature and past history, as well in the event of providing security for bigger loans, but since a complete business plan and a long-winded application aren’t required in every arrangement, things can move more quickly.

Check out these relationships: repayments , and red flags

If you’re in a long-standing relationship with a bank manager or another lender, you could talk to them about their application and lending process. Your broker may assist you with the different lending requirements.

Although many of the newer non-bank lenders operate exclusively online, certain lenders can assign a expert to guide you through the loan application process and truly get to know your business’s needs.

If you’re considering Non-Bank lenders review their reviews by independent sources. If an offer seems too tempting to be real or getting pre-approval prior to you’ve even made an application, or the lender is extremely aggressive in their approach take a look at speaking with advisors or brokers and examining the details before signing up.

When borrowing from a bank or non-bank lender, you’ll need to be clear about the terms of the loan and realistic about whether you can meet the repayments. One important aspect to think about is creating a set of rules for yourself when deciding whether business loans should be used to support your business’s success and to handle seasonal fluctuations, and fluctuations in cash flow, or to make the most of opportunities to buy stock in huge quantities, or for day-today operations and costs.