Bank vs non-bank business loans
Why so many businesses choose non-bank lenders, and when a bank is the better choice.
Quick answer
Banks usually offer the lowest cost, but they often want property or asset security, full financials and tighter loan conditions, and can take weeks to decide. Non-bank lenders usually cost more, but they can often decide and fund within days, need less paperwork, offer unsecured loans and have fewer restrictive conditions. Many businesses choose a non-bank for speed and flexibility, not just after a bank says no.
Banks and non-bank lenders compared
Time to decide and fund
- Banks
- Often days to weeks, and longer for secured loans
- Non-bank lenders
- Often the same day to a few days
Paperwork
- Banks
- Usually financial statements or tax returns, plus BAS
- Non-bank lenders
- Often just business bank statements, sometimes connected online
Security
- Banks
- Larger loans usually need property or business assets
- Non-bank lenders
- Unsecured options are common, especially for smaller loans
Loan conditions
- Banks
- Can include financial covenants and regular reviews
- Non-bank lenders
- Usually fewer ongoing conditions
Trading history
- Banks
- Usually 12 months or more, often 2 years for larger loans
- Non-bank lenders
- Some lend from 3 to 6 months of trading
Credit issues and ATO debt
- Banks
- Less flexible
- Non-bank lenders
- Some lenders specialise in imperfect credit or ATO debt
Cost
- Banks
- Usually lower interest rates and fees
- Non-bank lenders
- Usually higher, reflecting speed, flexibility and risk
Loan size and term
- Banks
- The largest loans and longest terms, up to 25 to 30 years
- Non-bank lenders
- Mostly shorter terms; private lenders can lend large amounts against property
| Banks | Non-bank lenders | |
|---|---|---|
| Time to decide and fund | Often days to weeks, and longer for secured loans | Often the same day to a few days |
| Paperwork | Usually financial statements or tax returns, plus BAS | Often just business bank statements, sometimes connected online |
| Security | Larger loans usually need property or business assets | Unsecured options are common, especially for smaller loans |
| Loan conditions | Can include financial covenants and regular reviews | Usually fewer ongoing conditions |
| Trading history | Usually 12 months or more, often 2 years for larger loans | Some lend from 3 to 6 months of trading |
| Credit issues and ATO debt | Less flexible | Some lenders specialise in imperfect credit or ATO debt |
| Cost | Usually lower interest rates and fees | Usually higher, reflecting speed, flexibility and risk |
| Loan size and term | The largest loans and longest terms, up to 25 to 30 years | Mostly shorter terms; private lenders can lend large amounts against property |
These are general patterns. Every lender has its own criteria, and banks now offer some fast, unsecured online loans for smaller amounts.
Why businesses choose non-bank lenders
Being declined by a bank is only one reason businesses use non-bank lenders, and often not the main one. Many businesses that bank with a major bank, and could qualify for a bank loan, still choose a non-bank lender. They accept a higher cost because of what they get in return.
Speed
Non-bank lenders can often decide in hours and fund within days. When stock, a contract, an ATO deadline or an equipment purchase won't wait, that speed is worth more than a lower rate.
Less paperwork
Many non-banks assess your business on its bank statements instead of full financials, tax returns and BAS, which suits businesses whose accounts aren't up to date.
No property or asset security
Unsecured business loans mean you don't have to put your home or business assets on the line. Many owners would rather pay more than tie up property.
Fewer restrictive terms
Bank loans can come with covenants, annual reviews and conditions on how you run your business. Non-bank loans usually have fewer strings attached.
More flexible criteria
Younger businesses, owners with imperfect credit and businesses with ATO debt often fall outside bank criteria but within a non-bank lender's.
Short on paperwork? See how low doc business loans work.
When a bank loan makes more sense
A bank is often the better choice when:
- keeping the cost as low as possible matters more than speed
- you're borrowing a large amount over a long term, such as buying commercial property
- your financials are up to date and you have property or assets to offer as security
- you can wait a few weeks for the bank to assess and settle the loan
Some businesses use both: a non-bank loan to move quickly now, then refinancing with a bank once they have the financials or security the bank needs.
What lenders actually publish
Lenders' own websites show the difference clearly. These examples are from lender profiles in our business lender directory, checked 23 October 2026.
Banks
- CommBank's secured BetterBusiness Loans need a minimum 30% deposit, and it asks for financial statements, proof of income, bank statements and ID. Profile →
- Westpac asks for your latest financial statements or business tax return and 12 months of BAS from the ATO. Profile →
- Bank of Melbourne says approval and settlement generally take a few days to a month. Profile →
- NAB's unsecured QuickBiz Loan gives an instant decision, but needs more than 12 months of trading and $75,000 or more in annual turnover, and goes up to $250,000. Profile →
Non-bank lenders
- Lumi lends from 6 months of trading and $50,000 in annual revenue, and says funds typically arrive 6 to 8 hours after approval. Profile →
- Velociti Capital lends from 3 months of trading, without property security, and says conditional offers come in 30 to 60 minutes. Profile →
- OnDeck's Lightning Loan needs no paperwork beyond connecting six months of digital business bank statements. Profile →
- HomeSec offers no doc loans secured against property, with no tax returns or BAS needed, and says credit history is never disqualifying on its own. Profile →
Types of non-bank lender
Online and fintech lenders
Fast, mostly unsecured business loans and lines of credit, assessed largely on bank statements.
Specialist lenders
Finance tied to a particular asset or need, such as invoices, trade, equipment or vehicles.
For example: ScotPac, Shift, Dynamoney, Angle Finance
Private lenders
Larger, short-term loans secured against property, often decided quickly and with light documentation.
For example: Maxiron Capital, HomeSec, Ventra Capital, Millbrook
Learn more about how private business lenders work.
Declined by your bank? What to do next
A bank decline usually comes down to the bank's criteria rather than your business. Common reasons include:
- a trading history shorter than the bank needs
- no property or assets to offer as security
- credit issues or a recent default
- ATO debt or a payment plan
- financials that aren't up to date or don't show enough profit
Ask the bank for the reason, then look at lenders whose criteria fit. If ATO debt is the issue, see our guide to ATO debt refinancing.
Is the higher cost worth it?
It depends on what the money is for. A non-bank loan that lets you take on a profitable contract, buy stock at a discount or clear an ATO debt before penalties grow can cost less overall than waiting weeks for a cheaper bank loan, or missing the opportunity.
Compare the total cost of each offer, including fees, not just the interest rate. Our business loan repayment calculator shows how repayments change with the rate and term.
Not sure whether a bank or non-bank loan suits you?
Talk to us. We work with a panel of 100+ bank, non-bank and private lenders and match you with the ones best suited to your business, loan amount and timing.
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- We seek multiple lender options for you
- Business finance from $30,000
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FAQs
Bank and non-bank business loan questions
A non-bank lender lends money but doesn't take deposits like a bank. Non-banks fund their loans from investors, wholesale funding or private capital. They range from online lenders offering fast unsecured loans to specialist invoice, equipment and private property lenders.
Mainly for speed, less paperwork, unsecured loans that don't need property, and fewer restrictive loan conditions. Some businesses also don't meet bank criteria because of a short trading history, credit issues or ATO debt. Many businesses accept the higher cost of a non-bank loan because the speed and flexibility are worth more to them.
Non-bank lenders usually pay more for their funding than banks, and they take on more risk by lending faster, with less paperwork and often without security. That cost is reflected in higher interest rates and fees, so compare the total cost of each offer, not just the rate.
Yes. Where you do your everyday banking doesn't limit who you can borrow from. Many businesses keep their transaction accounts with a major bank and borrow from a non-bank lender when they need funds quickly or don't want to offer security.
Not necessarily. A non-bank loan appears in your credit history like any loan, and repaying it on time can help. Some businesses use a short-term non-bank loan first, then refinance with a bank once they have the financials, trading history or security the bank needs.
Many don't for smaller loans. Unsecured business loans are common from non-bank lenders, though a director's guarantee is usually needed. Larger loans, and loans from private lenders, are usually secured against property or business assets.
Ask the bank why it declined, because the reason shows which lenders are likely to say yes. Non-bank and private lenders use different criteria, and some specialise in shorter trading histories, imperfect credit, ATO debt or businesses without property security.
Yes. We work with a panel of 100+ bank, non-bank and private lenders and seek multiple lender options for you, whether a bank or a non-bank lender suits your business best.
This page is general information only and isn't credit advice. Lender details are taken from each lender's published information, checked 23 October 2026, and can change. All lending is subject to each lender's credit criteria and assessment.