Bank or Non-Bank Finance

With so many different lending options available these days, it can sometimes be difficult to understand the difference between all the different type of lenders and what type of finance is best for you.

Finding the right finance really depends on what type of outcome you are looking for, what type of funds are available to you, and your individual circumstances.

Bank lending does have its pros, lower interest rates, lower set up fees and longer terms meaning smaller repayments, however, to qualify for a bank loan can often be difficult, especially for those businesses who are just starting out, or for anyone wishing to purchase an existing business. If you are one of the few who does qualify for a business loan, wait times can be months before you see an approval, let alone any funding.

Non-Bank funding, like the traditional banking, also has its pros and cons. Usually non-bank lenders rates are higher that of the banks, this is usually because funding comes from private investors rather than the reserve bank.

The benefits of non-bank lending certainly outweigh the cons. Non-bank lending criteria is usually much broader than that of the banks, some non-bank lenders will look at lending to new business startups (usually with some form of security), existing business purchases and to clients who’s credit rating is less than optimal. Loan terms with non-bank lenders can be short, however the loans can be used as short-term funding until you can look at refinancing through more conventional channels, such as the banks. Or you may wish to pay out the loan over the shorter term to save money in the long run.

The time that it takes to obtain funds through a non-bank lender is considerably quicker. Depending on the type of loan you are entering, you can obtain funds anywhere from 1 – 10 business days and the approval process can often be much quicker than the banks. There are times when funds are required quickly to get a job completed or get a deal across the line.

When looking for a business loan, it is always a good idea to look at all options available to see what is going to best suit your individual circumstances. If you are looking for any short term secured finance for your business, have a chat with us at Vine Capital to find out more about what we offer.