Since non-bank lending for restaurants is not authorized deposit-taking institutions, they usually don’t depend on client deposits to finance their restaurant loans. Rather they get their financing for the wholesale money market, where established organizations invest. Financial institutions depend on deposits for a portion of their funding, and so they have to go to the market for the remaining portion just like the non-bank lenders.
During the international economic crisis in 2007, the non-banking lending industry found it hard to obtain funds for their restaurant loans on the wholesale market. For this reason, the federal government stepped in to provide finances at a reasonable rate. The government realized how the non-bank lending sector was important since it kept the food service industry competitive.
It is evident that competition with the foodservice industry has come a very long way since the effect of the worldwide financial crisis was felt. The financial crisis presented a lot of fear about what will potentially happen locally. Consequently, this saw some business owner shifts from small lenders to the big financial institution since it was perceived as a safer alternative. Nevertheless, non-bank lenders have demonstrated their value persistently since the crisis was experienced. They have enhanced a healthy competition within restaurant loan market.
With the sky shooting cost of living and other financial issues, business owners are looking for lending options to help them increase their income and reduce their outgoings every month. Non-bank lending institutions are apparently providing a legitimate loan option, and that is lending money and power back to the business owner. The more the restaurants will support the non-bank lending sector, the more every part will save since a positive competition helps trigger the rate of interest down.
Top benefits of selecting a non-bank lender for your restaurant loan
They provide competitive alternatives
Dissimilar the big banks, non-bank lenders are never burdened by the cost of having huge corporate structure and branch network. For this reason, on-bank lenders can pass on the savings to their debtors in the form of lower rates of interest. Bear in mind that non-bank lenders typically offer the majority of competitive interest rates available in the market.
On top of that, savings for debtors can as well be in the form of lower setup and ongoing charges. The moment you are shopping for a restaurant loan, talk to different lenders to find out what setup and ongoing fees they charge. Note that is always the ongoing fees that can end up costing you a lot or saving you more.
Non-bank lending can provide niche lending solutions
Not every restaurant owner will fit suitably for a prime restaurant loan. Some restaurant owners need a specialized restaurant loan to suit their requirements to have their loans assessed on the merits instead of relying on automated valuation through score cards. Non-bank lending can offer a financial solution that can help restaurant owners get a loan that could have been rejected by the traditional banks.
Since all non-banks are small in size, you have a great chance to get a personalized service and get to be familiar with your lender.