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Bank or non-bank? Finance options for small businesses

- September 13, 2016 3 MIN READ

With cash flow crucial to small business success, we take a look at bank and non-bank lending solutions.

Whether you’re a tech startup, a tradie, or the local café, it’s likely that your small business shares a common challenge: cash flow. With 90 per cent of small business failures caused by poor cash flow, it’s a challenge worth prioritising.

After all, healthy cash flow gives you the chance to grow your business and continue contributing to Australia’s small business propelled economy– by hiring more staff, investing in new technology and systems, or opening a second location, for example. However, it’s not always easy and the Australian Bureau of Statistics found that access to finance is the most common barrier to innovation for small businesses.

On top of this, research from the NSW Business Chamber found about 30 per cent of small businesses felt they had missed an opportunity due to lack of credit.

But it’s not all bad news. The influx of non-bank lenders means there’s a competitive market out there willing to lend your small business the finance it needs to help fuel growth or get back on track. Here’s a quick look at some of the various credit solutions for small businesses.

Traditional bank lenders

Australia’s stable banking system – thanks to regulatory bodies including APRA – means banks have legacy and safety on their side. Banks are often the first port of call for borrowers, because they hold a majority of the market share, and may seem like the ‘easy’ option if everyday or personal banking is already done through a major bank.

However, a study by Digital Finance Analytics found that 65 per cent of small businesses are less than satisfied with their current banking provider and 75 per cent are willing to switch banks for a better proposition.

With banks being such large institutions, staff hold less authority to make quick decisions. For example, a single business loan application can take up to 21 business days to process on average, and generally requires a mountain of paperwork. Bank lenders have tight lending criteria, so you will often need assets or property to secure a business loan and may be required to show business plans, budgets and forecasts for proof of your businesses stability.

Non-bank lenders

According to fintech loan matching app,, more businesses are turning to non-bank lenders, particularly those in wholesale retail, trade and construction industries.

(In a recent survey),“It was surprising to learn that nearly 15 per cent of lenders were receiving 2,000 plus applications per month. These results indicate the non-bank business lending sector is thriving, and that some providers have achieved critical mass,” said Simon Isaacs, CEO of eBroker.

Non-bank lenders can offer competitive rates, niche loan products, access to finance for borrowers traditionally considered higher risk, and importantly, fast turnarounds. Lower overheads also usually mean lower fees.

Non-bank lender Moula, for example, allows small businesses to apply for a loan online within 10 minutes and receive funding within 24 hours. It takes just a few steps to enter business and personal information online, link business data and find out if you’ve been approved.

And it’s these unsecured loans – with no need for collateral such as property – which can be a good solution to alleviate cash flow pain quickly.

With all loans, it’s crucial to consider the application and approval process, speed of lending, loan amounts and terms, and customer service. You should also consider whether the loan suits you and the future growth of your business.

This article was brought to you by Moula. Business Loans. Quick. Smart. For more information on Moula or to apply for finance now, visit or call us on 1300 88 58 93.

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