In a nutshell
A non-bank lender is a lender that isn't an authorised deposit-taking institution, so it doesn't fund loans from customer deposits. Instead it uses investor capital, wholesale funding or its own money. Non-banks set their own credit policies, which often means faster decisions and more flexibility on paperwork, credit history, property type or loan purpose — usually priced to reflect that. They range from large specialist lenders to small private funds.
Key points
- Non-banks don't take deposits; they lend investor, wholesale or own capital.
- They set their own credit policy, often with more flexibility than banks.
- Private lenders are a subset, usually focused on property-secured loans.
- Check fees, terms and dispute arrangements carefully.
- Funded by
- Investors, wholesale, own capital
- Takes deposits?
- No
- Strengths
- Speed, flexibility
- Check
- Terms, fees, AFCA membership
When a bank says no, or says yes too slowly, most business owners end up talking to a non-bank lender. Non-banks now fund a wide range of Australian business lending, from equipment and invoice finance to unsecured loans and property-secured private lending. This entry explains what they are, how they differ from banks and how to choose well.
What makes a lender a “non-bank”?
Banks are authorised deposit-taking institutions: they fund loans partly from customer deposits and are prudentially supervised as a result. A non-bank lender doesn’t take deposits. It funds its loans from:
- investors — individuals, funds or institutions who invest in loan pools;
- wholesale funding — warehouse facilities or securitisation;
- its own capital — common for smaller private lenders.
Because they aren’t lending depositors’ money, non-banks can set credit policy independently. That’s the source of both their flexibility and their typically higher pricing.
What types of non-bank lenders are there?
| Type | Typical products | Typical strengths |
|---|---|---|
| Specialist business lenders | Unsecured loans, lines of credit | Fast bank-statement assessment |
| Asset and equipment financiers | Chattel mortgages, leases | Asset-focused, straightforward |
| Invoice and trade financiers | Factoring, discounting, trade lines | Grow with the sales ledger |
| Non-bank property lenders | First and second mortgages | Broader property and credit appetite |
| Private lenders and funds | Caveat, bridging, private first mortgages | Speed, deal-by-deal assessment |
How do non-banks decide differently?
- Evidence. Many use recent bank statements and live data rather than year-old tax returns.
- Credit history. Past issues are weighed in context — how old, how large, what’s happened since.
- Property. Non-standard properties banks avoid may be acceptable, sometimes at a lower LVR.
- Purpose. Tax debt, short-term bridging and business purchases are often within appetite.
- Speed. Fewer committee layers can mean quicker decisions.
That flexibility isn’t unlimited. Non-banks still need to be repaid, and they price and structure loans to reflect the risk they take on.
How do you choose a good non-bank lender?
- Read the full fee schedule — establishment, ongoing, early repayment, discharge and default. See loan fees explained.
- Understand the repayment structure and frequency.
- Check minimum terms and extension terms, especially for short loans.
- Ask about dispute resolution. ASIC notes that lenders providing only commercial credit aren’t required to join AFCA; some do so voluntarily.
- Look for clear communication. A lender that explains terms plainly before settlement is usually easier to deal with afterwards.
Because appetites differ so much between lenders, matching matters. A specialist who knows which lender suits which scenario can save you applications and enquiries — you can start with a 60-second enquiry.
Is a non-bank always the second choice?
No. For some needs — invoice finance, equipment finance, fast property-secured bridging — non-banks are often the first and best choice. For others, a non-bank is a sensible bridge back to a bank once paperwork or credit history catches up. Our bank vs non-bank comparison sets out when each tends to win.
What does a non-bank application look like?
It’s usually lighter than a bank application but not paper-free. Expect to provide:
- recent business bank statements, often shared electronically;
- ABN or ACN details and ID for directors and guarantors;
- a clear purpose for the funds;
- for property-secured loans, property details and any existing mortgage statement;
- a short explanation of any credit issues or ATO debt;
- for larger amounts, BAS, financial statements or an accountant’s letter.
Decisions can be quick, but the quality of what you provide still sets the pace. Incomplete or inconsistent information slows any lender down. For businesses whose paperwork is behind, a low doc path may be available; for those with past credit problems, see bad credit business loans.
Are non-banks regulated?
Business lending by non-banks is subject to general law, including contract law, consumer protection laws on misleading and unconscionable conduct, and unfair contract terms protections for small business contracts. Because they don’t take deposits, non-banks aren’t prudentially supervised in the way banks are. For borrowers, the practical safeguards are the same with any lender: read the contract, understand every fee and check dispute arrangements.
Terms used in this entry
- Non-bank lender — a lender that doesn’t take deposits. Glossary →
- Private lender — a lender using private or investor capital, usually property-secured. Glossary →
- Lender — the organisation providing the money. Glossary →
- Loan servicing — the ongoing administration of a loan. Glossary →
Worked example (illustrative)
Illustrative only. A landscaping company’s bank has been reviewing a working capital request for six weeks and now wants two more years of projections. The company has a large project starting in a fortnight and needs $150,000 for machinery hire and wages.
A non-bank lender reviews twelve months of bank statements and the project contract, and approves an unsecured facility within days, with a director’s guarantee. Eighteen months later, with updated financials and a longer track record, the company refinances the balance to its bank on a longer term. The non-bank loan did its job: it solved a timing problem the bank couldn’t.
Bank too slow, or said no?
The right non-bank lender can often move faster and look further than a bank. Enquiring takes about 60 seconds and there’s no credit check when you first enquire. Your details aren’t sprayed around the market — a real person reviews your situation, matches it with lenders whose appetite fits, and calls you. Please be accurate about your trading, security and any credit history so we can get it right first time.
Frequently asked questions
Are non-bank lenders safe to borrow from?
Many are well-established businesses. As a borrower, your risk is less about the lender's funding and more about the loan terms. Read the contract, understand the fees and check whether the lender is an AFCA member.
Why would I use a non-bank instead of a bank?
Common reasons are speed, flexibility on documents, a credit history the bank won't accept, a purpose or property type outside bank policy, or a bank simply being slow or unresponsive.
Are non-bank loans more expensive?
Often, because non-banks' funding costs are typically higher and they take on risks banks avoid. Every loan is priced on the business's circumstances, and a faster, more certain approval can be worth more than a lower price that never arrives.
Can I move from a non-bank back to a bank later?
Yes. Many businesses use a non-bank for a period — while paperwork catches up or a credit issue ages — and then refinance to a bank.
What is a private lender?
A lender using private or investor capital, typically for property-secured loans. They assess each deal on its merits and are often used for short-term, bridging and caveat lending.