Non-bank lenders vs Typical bank loans

The decision to take a business loan for small businesses? The first thing to consider is which lender to approach. Here’s an easy guide to the pros and cons of traditional lenders as well as Non-Bank lenders.

The first thing to consider is small-business financing is usually a good option for business owners:

• With a clear roadmap for expansion or a clearly-defined short-term goal
• Who is able make the payments
• Know the terms and terms associated with the loan – your adviser or broker is there to assist you with any questions.

If you’re willing to make an investment in inventory, brand new equipment or technology or staffing, additional training or renovation, or even a new location that can take your enterprise to the next step and beyond, then you should take a look at the advantages and disadvantages of taking on the traditional loan from a bank versus using a non-bank lender.

Do you prefer a lender online or a bank?

Lending from banks

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

The application process for bank loans could be complex and lengthy, and may require a large amount of paperwork that some small businesses owners may be constrained by time constraints to meet. The process can be speedier if the bank has digital ability to access your personal financial records even though banks aren’t considered to be data-savvy when it comes to small business lending, they are becoming better.

As with any type of loan it is possible that lower interest rates may need to be considered alongside the features of the loan product in order to select the most suitable type of loan. The lender and the loan Traditional bank loans could have strict guidelines and cumbersome applications processes and lack flexibility.

With cash flow so critical to the survival of many small enterprises, the gap between a loan that could fund stock to sell in the near future, and a loan granted in the next month when season’s demand has ended can be make or break.

Business online or non-bank loans

If a good credit history and solid security are usually necessary for obtaining an bank loan, Non-Bank lenders may be more flexible with their approach. They could also have greater flexibility in structuring loans.

Non-Bank lenders are often more technologically advanced than banks. This means applications can sometimes be processed and approved quickly and the funds can be made available by the next dayafter approval.

There is a need to explain what the loan is for along with your business’s nature and its history, as being able to provide the security required for larger loans but since a complete business plan and lengthy applications aren’t required in every arrangement, things can move quicker.

Attention: Relationships, red flags, and repayments

If you have a good relationship with a bank manager or another lender, you can discuss the process of applying for loans and obtaining approval. Otherwise, your broker can assist you with the different requirements of lenders.

While many newer or non-bank lenders are exclusively online, some lenders can assign a loan specialist to guide you through the process of applying and get to know the needs of your business.

If you’re thinking of a loan from a Non-Bank lender look into independent reviews. If an offer appears too good to be true or the pre-approval you receive before you’ve even applied or the lender seems aggressive in their approach think about speaking with a broker or adviser and examining the details prior to signing the contract.

If you’re borrowing money from a non-bank or bank lender, it is important to be clear about the terms and whether you can meet 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 support your business’s success and to handle seasonal fluctuations and cash flow fluctuations, to profit from opportunities to purchase inventory in massive quantities, or to pay for day-today operations and costs.