4 Advantages of Nonbank Business Lending

You’ve probably heard the age-old saying, “It takes money to make money,” which holds true in business. You need money to grow or expand your business, acquire assets, cover operating costs, and keep your business afloat during unexpected slow periods. However, securing a business loan or financing from a bank can be challenging due to their tightened borrowing requirements.

The U.S. Federal Reserve surveyed bank lending practices in mid-2023, revealing that “major and significant net shares of banks reported having tightened standards on loans to large and middle-market firms and small firms, respectively.”¹

Many business owners have experienced the disappointment of receiving a rejection notification from their bank. But fear not! The lending landscape is rapidly evolving, thanks to nonbank lenders like Regents Capital, which understand businesses’ unique needs and challenges and offer more flexible and accessible loans and financing options. Keep reading this Regents Capital blog article to learn four advantages of nonbank business lending.

What is nonbank business lending?

As the name implies, nonbank business lending refers to loans and other financial services offered by entities (nonbank lenders) other than traditional banks. Nonbank lenders leverage technology and data analytics to streamline the borrowing process for business owners.

One key advantage offered by nonbank lenders is their ability to extend business loans and financing products to businesses that may not meet the strict criteria set by banks. Regents Capital, for example, utilizes alternative underwriting methods and considers factors beyond credit scores to offer opportunities for businesses that would otherwise be left out of the borrowing market for working capital loans, lines of credit, and other funding solutions.

Now, let’s take a look at the four key advantages of nonbank business lending.

1. Easier application process

Banks typically require lengthy applications for business loans and financing. They might ask for a business plan, a business loan proposal (this outlines the purpose of the loan and how you intend to use it), personal and business tax returns, articles of incorporation, and legal contracts/agreements, to name a few.

Nonbank lenders, on the other hand, afford you the convenience of a simple application process that requires far less documentation. At Regents Capital, you can apply for business funding online in minutes; our application asks for basic information about you and your business and other documents depending on the type of funding and the amount you are requesting. With minimal documentation requirements, you can say goodbye to the tedious paperwork associated with traditional bank loan applications.

2. Faster approval decisions

Whether you’re a small business or an established middle-market company, securing quick access to capital can be the key to seizing growth opportunities and staying ahead of the competition. That’s where nonbank loans and financing come into play.

Because less documentation is required when applying for business funding from a nonbank lender, and the borrowing requirements are less stringent than those at a traditional bank, you can expect to receive an approval decision promptly.

3. Less-stringent credit score requirements

Traditional banks often rely primarily on credit scores to determine business loan and financing eligibility. This can be a significant setback for business owners with a low credit score or limited credit history. Nonbank lenders, however, offer greater flexibility regarding credit scores.

A good credit score will boost your chances of getting your funding request approved at Regents Capital. However, we also consider other factors, such as your time in business and annual revenue. If you have a below-average credit score or limited credit history, you may still be able to obtain one of our business funding products.

4. Quicker funding turnaround times

As mentioned earlier, traditional loan and financing processes often involve lengthy paperwork and strict eligibility criteria, which can delay decision-making and funding turnaround times. However, nonbank lenders have made obtaining business funding faster and more convenient.

Let us say you apply for business funding from Regents Capital. Once you submit the required information and documentation, we will review it promptly during our regular business hours and provide you with a decision. If your application gets approved, you can expect to receive funding quickly. We can often fund specific loan and financing amounts on the same day applications are submitted and approved.

Conclusion

If you seek a loan or financing for your business and want to avoid extensive documentation, high credit score and collateral requirements, and lengthy approval processes, consider a nonbank lender like Regents Capital. We’ve helped businesses in countless industries nationwide get the funding they need, often after their loan and financing requests have been denied by a bank.

Disclaimer.

This Regents Capital blog post is purely educational and features general information and opinions. Nothing contained herein is intended to constitute advice or recommendations and should not be treated as such. Regents Capital is not affiliated with nor endorses the U.S. Federal Reserve.

Sources:

1 – https://www.federalreserve.gov/data/sloos/sloos-202307.htm