What Are Non Bank Lenders? A Comprehensive Guide.
Searching for the right financing partner but hitting roadblocks? Non bank lenders offer flexible terms and swift approvals to secure the finance you need.
This guide provides the essential info you need to know. Expect to learn what non bank lenders are, the types of non bank lenders that can support you, and the key questions to ask to make the right choice for your financial future.
We have decades of expertise and a commitment to exceptional financial service, Fortis Capital is your partner towards the ideal lender.
What are Non Bank Lenders?
It is often difficult to find the perfect fit with traditional banks. That's where non bank lenders come in. They offer an alternative source of lending to borrowers looking for more flexible options not offered by standard banks.
Banks operate within a strict and highly regulated retail environment. Non bank lenders often have their own sources of funding. This could be through private wholesale investors, issuing bonds, or borrowing money at wholesale rates themselves. The potential upside for you is a larger range of loan options that could be better suited to your circumstances.
While non bank lenders make up a relatively small part of the financial system, they can be an invaluable resource for some borrowers looking to explore alternatives to traditional lenders.
What Are the Types of Non Bank Lenders?
Beyond traditional banks, a wide range of non bank lenders offer their services in NZ.
Non bank financial institutions may specialise in property finance, business lending, asset lending, consumer finance, venture capital and startups to name a few.
Even credit unions, which are member-owned cooperatives, can be considered non bank lenders, offering similar products and services to banks but often with a focus on specific communities and potentially more competitive rates.
What’s the Difference Between Bank and Non Bank Lenders?
While both banks and non bank lenders play a role in the financial services industry, some key differences set them apart.
Banks offer a broader scope of services, such as accepting deposits, issuing loans, facilitating payments and managing accounts. Non bank lenders, on the other hand, tend to specialise in specific areas like investment products and particular types of loans.
This specialisation often allows non bank lenders to cater to borrowers who might not qualify for traditional bank loans due to more flexible lending criteria and potentially faster approval times.
Unpacking the Pros and Cons of Non Bank Lenders
Non bank lenders can be an invaluable tool for borrowers seeking loan options beyond traditional banks. Here's a breakdown of the advantages and disadvantages to consider:
Pros:
Flexibility: Non bank lenders generally have less strict eligibility requirements, looking beyond just credit scores and consider factors like future income potential, transactions with higher gearing, low equity, and lower debt servicing capacity. This is often helpful for borrowers with non-traditional income sources or those rebuilding credit.
Speed: Streamlined applications and quicker loan approvals are hallmarks of non bank lenders. This is ideal for situations where you need funding fast.
Innovation: They may offer unique loan products or specialised services tailored to specific needs, like property development financing or equipment purchases.
No-Credit Options: Some non bank lenders cater to businesses or individuals with limited credit history, offering a lifeline for those who might be shut out by traditional banks.
Cons:
Limited Accessibility: Non bank lenders can operate online or with fewer physical branches, which could be inconvenient for those who prefer face-to-face interaction.
Brand Recognition: Compared to established banks, non bank lenders may have lower brand recognition, potentially causing some hesitation among borrowers.
High Minimums: Some non bank lenders may have high minimum loan amounts, making them unsuitable for those needing smaller loans.
Higher Costs: Associated with lending further up the credit risk curve.
Limited Services: Unlike banks, non bank lenders typically don't offer a comprehensive suite of financial services like checking accounts or deposit options.
The Takeaway: Partner with a Trusted Non Bank Lender and Explore Your Options Together
While traditional banks are a go-to for many, non bank lenders offer a valuable alternative, especially for borrowers with unique needs, more flexible eligibility requirements and faster approvals.
As with any financial decision, it's essential to consult with dedicated experts to gain a clear picture of the solutions available to you. At Fortis Capital, we pride ourselves on connecting you with industry-leading non bank lending solutions. With tailored services, faster approvals, and access to diverse profiles and competitive rates, we’re dedicated to empowering your finances.
Our team is available to guide you through this journey, with valuable expertise and advice to help you make the right decisions on your non bank loan. To benefit from our decades of expertise, contact the Fortis Capital team today.