why choose non-bank lenders for small business loans

Banks are not the only finance providers when it comes to small business loans. Non-bank lenders might be your right answer.

  • May 5, 2022
  • 4 min read
  • Thornmoney
  • May 5, 2022
  • 4 min read
  • Thornmoney
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When it comes to getting a small-business loan, a majority of people would likely turn to banks for help. Though banks aren’t the only option available to assist with funding, they’re deemed the most trustworthy and accessible – or are they? We’re here to debunk the misconceptions and show you why non-bank lenders may just be a better choice for you.

what is a non-bank lender?

Non-bank lenders provide finance (from a range of funding sources such as their own source) but they aren’t banks, credit unions, or deposit-taking institutions. They would then lend this money out with an added margin for profit. They may even allow you to borrow more than what’s allowed by big banks or offer different types of finance with alternative securitisation options.

are non-bank lenders as safe as traditional banks?

Yes, non-bank lenders are as safe as traditional banks!

Despite not being regulated by the Australian Prudential Regulation Authority (APRA) and unclassified as an authorized deposit-taking institution (ADI), non-bank lenders are managed by the Australian Securities and Investment Commission (ASIC). They also comply with the credit rules and regulations, laws, and industry codes as banks.

non-bank lenders can be the perfect fit for your business
non-bank lenders can be the perfect fit for your business’ financial needs

why should I choose a non-bank lender for my small business loans?

There are several reasons to choose a non-bank lender over banks for your small business loans such as:

  1. More choices: non-bank lenders offer an alternative business finance solution that gives borrowers more choices and options that aren’t available through traditional banks.
  2. Speciality: non-bank lenders have more specialised products and may rate differently from the banks. And they are even willing to accept applications from business startups and freelancers. Examples of specialised products are asset finance, business line of credit, business loans, peer-to-peer lending, reverse mortgages, and other niches.
  3. Flexibility: there’s higher flexibility to tailor rates and terms to suit your business needs. Regardless of circumstance, every application is assessed individually to provide personalised loan options and interest rates that works best for the business situation. Even business owners who have ATO debt, those with bad credit histories, and newer business owners with little to no documentation are welcome to apply.
  4. Customer service: unlike traditional banks, there are no physical branches when it comes to non-bank lenders. However, as these lenders operate digitally, they promise amazing customer service and communication. Their teams are available to assist via phone during operating hours or at the click of a button.
  5. Speed: you are guaranteed a quick turnaround approval thanks to their higher level of customer service. This is due to not being a large corporation or conglomerate. They also quickly adopt new technologies to speed up lending decisions.

As a non-bank lender, thornmoney is here to provide fast, funding solutions to help fuel your business. Depending on your demands and needs, there are two main cashflow solutions for anyone with a small business to consider:

  • Business line of credit is a non-bank commercial loan for when you’re experiencing a cash flow gap caused by your client’s outstanding invoices. Otherwise known as debtor finance or invoice finance, businesses assign sales invoices to a lender in exchange for a cash advance. Read “What is invoice finance?” to know more.
    This flexible solution will help to increase your current working capital. Check out the benefits of using invoice financing solutions for a better understanding of how this type of funding might benefit your business
  • Asset finance is great for when you’re looking to purchase or rent new or used equipment/machinery and vehicles to help grow your business. The full cost of the items purchased can be split into monthly payments over an agreed time period. This helps businesses manage their expenditures better and assist cash flow while the asset works to acquire income. Read “what is asset finance.”

More importantly, now that you have a better understanding of non-bank lenders, do make sure you have thought things through before seeking out funding. If you haven’t quite made your mind up, Thornmoney’s section on things to consider before taking up a business loan just might make things easier.

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  • Up to $2M in funding
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