According to a survey by Banjo Loans, over 40% of experienced brokers now prioritize non-bank lenders when arranging business loans for SMEs. This trend is particularly evident in loan facilities under $500,000, where speed and simplicity are crucial factors for business owners.

Several factors contribute to this growing preference for non-bank lenders:

• Speed and Efficiency: Non-bank lenders often offer quicker turnaround times, enabling SMEs to access funds promptly to seize business opportunities or manage cash flow challenges.
• Flexible Terms: Alternative lenders provide more adaptable loan terms, catering to the unique needs of SMEs, which may not fit the rigid criteria of traditional banks.
• Reduced Bureaucracy: The streamlined processes of non-bank lenders minimize the administrative burden on SMEs, making the borrowing experience more straightforward.

However, this shift also brings certain risks. Non-bank lenders have been increasingly active in court-based recoveries, indicating a more aggressive approach to debt collection. Data from the Alares Credit Risk Insights report shows that non-bank lenders have steadily increased court actions since 2019, reaching record levels. This trend underscores the importance for SMEs to thoroughly understand loan terms and ensure they can meet repayment obligations.

Despite these challenges, the move towards non-bank lenders reflects a broader transformation in the SME financing landscape. Businesses are seeking more responsive and tailored financial solutions, and non-bank lenders are stepping in to fill this gap. As this trend continues, SMEs must carefully assess their financing options, considering both the benefits and potential risks associated with non-bank lending.