How do non-bank lenders work?

How do non-bank lenders work?

The fact that there is no “one size fits all” loan application is one of the fantastic things about alternative lenders. Each loan is evaluated on an individual basis, and in rare situations, there can be customed designed loan agreements.

In essence, your loan application can be evaluated more quickly and easily the more information you provide.

Because Australia’s fin-tech market is still in its infancy, there is inevitably a lot of customer anxiety. We discover that this is primarily because customers believe they simply don’t know enough about internet lenders.

Therefore, in order to clarify what is done and how it is done, we’ve compiled the most frequent enquiries concerning online lenders and our application procedure:

Variations in the Application Process

The speed of the application is the primary distinction between non-bank lenders and their conventional bank equivalents. Non-bank lenders can frequently accept and fund loans in less than 24 hours after receiving an application. This is due to the fact that the full procedure can be done on the phone and online. New technologies are used by alternative lenders to underwrite and execute loans, speeding up and simplifying the funding process.

One point of contact customer service offered by non-bank lenders is another significant distinction. Customers can speak to the same individual throughout the loan process, making the application considerably more personalised.

What Is Evaluated When I Apply

The majority of non-bank lenders, provide unsecured financing options, so you won’t need to use your home as collateral to get a loan. Instead, they evaluate online commercial data to evaluate loan requests. BAS, bank transaction feeds, and accounting data feeds may all be examined. They can


Also interface directly with your online accounting systems, such as Xero or MYOB, to collect the information required.

Their online application screen is used for all of this, but they never have access to your accounts. They can only view snapshots of your transaction data; they are unable to do any actions in your account. Additionally, all of your data is automatically destroyed once your loan is paid off, leaving no trace behind.

Standard Interest Rate for a Starter Loan

The interest rate charged is initially based on a company’s cash flow and is based on their evaluation of the borrower’s risk. Interest rates on the outstanding balance range from 0.61% per fortnight to 2% per fortnight. With a 0.61% interest rate, a $100,000 loan kept for a full year would require

$108,444 in repayments. Rates start at roughly 15% in APR terms.

Everything varies from one firm to another. However, in general, the more information you provide, the simpler (and quicker) it will be for them to evaluate your application and the more likely you are to receive a reduced rate.

Make the most of your application

The most important thing to do is to grant the lender access to your electronic bank or cloud-based accounting data. Although it may seem unsettling, they don’t have access to your accounts. To obtain the required information, they only view a “read only” snapshot of the accounts.

Aside from that, simply have as much paperwork as you believe you’ll need available. If your company is set up as a trust, be sure to have a certified copy of the trust deed available. After that, it’s just a matter of doing something as straightforward as comparing your bank transaction information (if that doesn’t make much sense, speak with your accountant or book-keeper).

Maintain a clean credit history as well because a good credit score is hard to obtain and is easily lost. Recognise the elements that affect a credit score and pay close attention to them.

A Worst-Case (Or Is It) Scenario

Even if they are unable to lend anything to you, they will continue make an effort to support the small businesses even after they have been turned down. They do go over the causes of the decline and offer guidance on specific disciplines that will improve their ability to borrow in the future. For instance, by assisting them in comprehending the various ways that the borrower’s activities and inactions might affect their credit scores.

Businesses are typically refused not because they are “bad” businesses but rather because they lacked the necessary information, paperwork, or company experience to make an assessment. Many of the applications rejected are from companies that are simply too new, and they are advised to simply reapply in a few months after they have more business information.

How to Recover for the Second Round

What businesses can do after they have been refused in order to increase their chances the following time is one of the most often asked queries received. It frequently has to do with good business discipline, such as paying the tax office (or establishing payment plans with the ATO) and submitting tax returns and BAS’s on time. Understanding the factors that affect credit scores and then controlling those factors to improve your credit rating, avoiding easy things like bank fraud and asking yourself if you truly need certain important and discretionary company expenditures.


In the end, everything comes down to being careful. You must consider the true cost of financing as a small business owner and whether it is beneficial for your enterprise.