Why Small Businesses need to consider a Non-Bank Loan

Note that understanding the dissimilarities between how banks give out loans and how alternative lenders lend their cash based on various regulations is not something that business owners are ready to learn. Bear in mind that before the traditional banks were introduced, there were private creditors, merchant, and traders.

Currently, there are private lenders, wholesale funders, contributory, pooled investment schemes, subscription based loan funds, peer-to-peer and also alternative creditors. All these non-bank lenders have sourced their finances to on-lend from various banks.

The truth of the matter is in the market; you will come across both the good creditors and the bad ones. Sitting just under traditional bank loan is a massive honey pot of creditors that are looking forward to giving out their money to business owners. Note that all these creditors have varied criteria, loan structure, and repayment strategies, all of which must be considered.

Due to the popularity of business lending at large, some creditors are somehow expensive than bank overdraft and then again some factors must be considered when these loans are priced depending on the form of security needed. It is simply inexpensive to get the funds if you place your property as collateral and more costly if you don’t.

Despite the fact banks loans usually have lower interest rates than the non-bank lending sector, there are some benefits and quite a few scenarios where and a non-bank lending is an excellent preference for your small business.


If you have properties or invoices you can place as collateral; you can get a lower interest rate with a non-bank lender for the reason that they are more likely to work with your circumstances to offer your business the funds you need. Bear in mind that banks are usually strict and they need very strong financials, accompanied with a blanket lien on all your business’s properties.

Quick funding

Typically, loan application process associated with bank loans is lengthy and time-consuming. If you find yourself in a fix and all you need is instant cash, securing a loan from alternative lenders is the best option since they have a fast application procedure and quicker results than a bank loan.

Less favorable credit

Note that Banks tend to be less lenient when picking who to give their loan. Even though you may have a stellar credit and flawless payment history, one simple mistake on your credit report might cause your loan application to be declined by traditional banks. Now, this is where the non-bank lenders come in handy. As you have realized, alternative lenders are more likely to listen to you and help you out from that bad situation. You might encounter some compromises such as taking a small amount of a loan or placing some of your property as collateral. Despite all that, the aim of non-bank lending is to help your business expand. If your loan is not approved by a bank, or you need a better opportunity to get a loan for your business, seeking for the alternative lender is a lucrative idea.

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