Definition
A non-bank lender provides finance without holding a banking licence, meaning it does not take deposits the way an ADI does. Non-banks fund loans from investors, private capital or wholesale facilities rather than customer deposits. Many specialise in particular products and can be faster or more flexible than banks, especially for unusual situations, though pricing is generally higher.
Non-bank lenders now provide many of the business finance options small businesses see, from fast unsecured loans to short-term property lending.
How they differ from banks
Without customer deposits, non-banks raise funds from investors and wholesale markets. That generally makes their funding dearer, which flows into pricing. In return, many assess applications case by case and move quickly.
Where they are common
Cash-flow lending, caveat and bridging loans, equipment finance, invoice finance and lending for situations outside bank policy, such as recent tax debt or short trading history.
What to check
Confirm the lender’s identity and ABN or ACN, get every cost in writing and read security, default and payout clauses. Our guide to bank versus non-bank lenders helps you decide. To be matched with a suitable lender, make one enquiry.
Common questions
Are non-bank lenders regulated?
They are not prudentially regulated as deposit-takers, but they must comply with general laws. Check who you are dealing with and read every term.
Could I refinance to a bank once things improve?
Often yes, once your position improves. Check early repayment terms first.
Sources and further reading
Related terms