Business Owners Find Financing Here
At Your Deal Source we do more than connect you with Trusted Advisors to help run and grow your business.
We’re also here to help you find the resources to finance that growth.
Our specialty is non-bank lenders. The type of financial support that can be crucial to companies that don’t fit the mold of traditional lending sources.
Non-bank lenders have emerged as significant players in providing alternative funding options for SMBs, supporting entrepreneurship, fostering economic growth, and addressing needs of typically underserved sectors.
Think non-bank lending might be helpful for your business?
Book a financing call with us today
Understanding the Contrasts Between Non-Bank Loans and Bank Loans
Is your SMB in need of some cash to grow, but doesn’t necessarily meet the strict criteria of traditional bank lenders? Read on, as we explore the key distinctions between non-bank loans and bank loans and shed some light on these markedly different financial paths.
The Origins: Traditional Roots and Modern Innovations
Bank loans have been a part of our financial landscape as long as that landscape has existed. They are typically offered by established banks, deeply rooted in tradition and bureaucratic procedures. They have stood the test of time, providing financial assistance with a touch of familiarity. They are still the cheapest way to finance your growing enterprise.
Non-bank loans or alternative financing, however, represent a more recent addition to the lending landscape. These loans come from hedge funds, unregulated institutions and private lenders such as online platforms or peer-to-peer networks. Embracing innovation, non-bank loans offer a more flexible and convenient borrowing experience, catering to the evolving needs of borrowers.
Formality vs. Flexibility
A traditional bank loan has many rules and regulations. Some of these rules come from the Federal Government, some from the State regulators and others from the bank board. Imagine a bank loan as a formal dinner party, where etiquette and adherence to protocols are paramount. First, not everyone is invited to such a party. It also involves navigating through paperwork and conforming to established norms. Patience and compliance are key elements of this traditional lending process.
On the other hand, non-bank loans resemble a casual networking with people you may know at your favorite cafe. The atmosphere is more relaxed, and the emphasis is on creating a comfortable borrowing experience. There are still lender rules and many qualifications you must meet, but some of those can be negotiated. The flexibility offered by non-bank loans allows for a more informal and user-specific approach.
The Need for Speed
Business moves at a breakneck speed. For those in good standing, your current banking relationship can offer a solution for most of your borrowing needs. But that is not always the case with every company. So, you are forced to change banking relationships or wait for improved conditions inside the bank or in your company. The approval process can be time-consuming, involving extensive document submission and thorough scrutiny. It may require time that a business may not have.
In contrast, non-bank loans leverage technological advancements to provide faster decision turnaround times. Generally, these loans do not require changes to your current banking relationship. They may require additional controls on payback or spending, depending on the circumstances. Online platforms and streamlined processes expedite the application processes, allowing borrowers to access funds more quickly. Efficiency is the name of the game in this arena.
Risk and Reward Dynamics
Risk and reward considerations are crucial when contemplating loans. Bank loans typically demand strict criteria, emphasizing collateral and high credit scores as a means to mitigate bank risk. The stringent requirements act as a safeguard for the lender, ensuring the return of their capital. Since the criteria is governed by multiple governing bodies, companies that meet such criteria are generally lower risk borrowers and dictate lower cost of funds.
Non-bank loans, while also assessing risk, can be more lenient in their criteria. They may provide opportunities for borrowers with lower credit scores or limited collateral. These lenders are willing to take calculated risks, providing access to funds for individuals who may not meet traditional banking standards. As such, non-bank lenders ask for higher rates and more fees on their funds.
Armed with this information, the only remaining question you may have is, “How do I find the right lender for my business?”
Your Deal Source may be the answer. Contact us for a free consultation about how we can help you find the right lender, and the Trusted Advisors needed to help grow your business.
Types of Non-Bank Lending
Looking to better understand what the differences between non-bank lending? Check out the videos below to learn about each.
Non-Bank Loans for Small Businesses: What You Need to Know
We know that sometimes, traditional banks can be a bit of a tough nut to crack when it comes to getting that much-needed financial boost. Considering the latest economic news, and the state of global economy, bank credit is getting tighter. That's where non-bank loans can really save the day. (And, your business.) So, we’ve compiled a list of things you’ll need before you talk to the right lender.
1. Solid Business Plan
A well-crafted business plan can be your secret weapon. It should outline your company’s vision, target market, operating plan, growth strategy and financial projections showing the capital need. Show them you mean business, and you’ll have a leg up in the loan game.
2. Performance Matrix (or Maybe Not)
Unlike traditional banks, that often have strict performance and ratio requirements, non-bank lenders may look at other criteria to judge your business. While a good performance is a wonderful plus, it doesn’t necessarily make or break your deal. These lenders may focus on various other factors, like your business’s assets or industry you are in, or special programs that are available for the lender. So, don’t panic if your performance isn’t perfect. There’s still hope!
3. Time in Business
Most non-bank lenders prefer to lend a helping hand to established businesses. While requirements may vary, many lenders look for at least five years of consistent operation. This gives them a sense of stability and helps assess your business’s financial performance over time.
4. Collateral? Not Always!
Unlike traditional loans that often demand collateral to secure the funds, alternative loans can be a bit more flexible. Many non-bank lenders provide loans based on future cash results. However, keep in mind that interest rates and terms might be a tad higher to compensate for the increased risk they’re taking.
5. Document Your Past and Future Success
Just like with regular banks, be prepared to provide various documents such as business licenses, legal agreements, bank statements, tax returns, and other financial records. Organization is key here, so make sure you have everything in order to avoid any unnecessary delays.
Non-bank loans can be a breath of fresh air when traditional banks slam the door, but it’s essential to do your homework and explore different options to find the best fit for your business needs.
That’s where Your Deal Source can be your best resource. Schedule a free consultation with us to learn about our lending partners and how we can help find the right non-bank lender for your business.
Demystifying the Non-Bank Lending Underwriting Process: A Guide for Small-to-Midsized Businesses
Demystifying the Non-Bank Lending Underwriting Process: A Guide for Small-to-Midsized Businesses
Introduction:
So, your business is thriving and you’re ready to take it to the next level, but that level requires additional capital, and fast. That’s where non-bank lenders come in, ready to support entrepreneurs like you where banks may be reluctant. But before you find the right lender, it’s essential to understand the underwriting process and the requirements involved.
Step 1. Gathering Initial Information
The first step in the underwriting process is gathering relevant information about your business. Non-bank lenders will typically request documents such as your business plan, financial statements, tax returns, and bank statements. This helps them understand your company’s financial health and evaluate the risk associated with lending to you.
Step 2. Creditworthiness Evaluation
Once the lender has your initial information, they’ll dig into your creditworthiness. They will assess both your business assets and may ask for external verifications of your performance (such as a financial audit or quality of earnings report). Your payment history, outstanding debts, and any past bankruptcies or defaults will be considered. Don’t worry if you are not perfect. Non-bank lenders often have more flexibility than traditional banks in this regard.
Step 3. Collateral and Cash Flow Assessment
Depending on the type of the loan, non-bank lenders will require collateral as security for the loan. Collateral can be in the form of real estate, equipment, inventory, or accounts receivable. The lender will evaluate the value and quality of the collateral to determine its suitability. Additionally, they will assess your cash flow and may redirect your cash flow to pay back the loan.
Step 4. Loan Structuring and Terms
Once the lender has a complete picture of your business, they’ll determine the loan structure and terms. They will verify the loan amount, interest rate, repayment period, and any other conditions. Non-bank lenders often provide more flexible terms than traditional banks, tailoring the loan to your unique needs and circumstances.
Step 5. Decision Time
It also helps to have some experienced guidance in the process. That’s where Your Deal Source can help by not only introducing you to the right non-bank lenders in our network, but providing access to consultant resources to help grow your team, and your business.
Boosting Your Business's Appeal to Non-Bank Lenders: Building a Stellar Team
Is your business experiencing rapid growth, leaving you in need of working capital?
Non-bank lenders can be the ideal solution for financing, but before you dive in, ask yourself this: Is your company ready to meet their requirements for lending? Non-bank lenders carefully evaluate your business, and one of the crucial factors they consider is the competence of your team. A strong team can make your business more appealing to non-bank lenders.
As your business expands, lack of expertise can hinder your progress. Non-bank lenders understand the significance of a capable team in ensuring successful growth. When evaluating a potential cash advance, lenders want to see that your team possesses the skills and know-how to manage the funds effectively. This is where fractional resources come into play. Instead of burdening your payroll with new full-time hires, consider tapping into fractional resources like a Chief Marketing Officer (CMO), Chief Financial Officer (CFO), Chief Information Officer (CIO), etc. These professionals bring specialized expertise, without the long-term commitment.
At Your Deal Source, we understand the challenges businesses face when it comes to finding the right expertise. That’s why we offer access to a pool of vetted professionals through our Trusted Advisor program. These fractional resources are handpicked to help businesses bridge their expertise gaps and demonstrate their team’s capabilities to non-bank lenders. Whether you need marketing expertise to launch a new product or financial acumen to manage your growing capital, our Trusted Advisors have you covered. With their support, you can confidently approach non-bank lenders, showcasing a well-rounded team that is equipped to handle your business’s accelerated growth.
To make your business more appealing to non-bank lenders, it’s crucial to build a stellar team that demonstrates expertise and capability. Fractional resources like CMOs, CFOs, and CIOs can fill the gaps in your team’s skillset. Your Deal Source’s Trusted Advisor program connects you with vetted professionals who can support your business’s growth journey. By showcasing a competent and well-rounded team, you increase your chances of securing the financing you need.
