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Non-bank Lending: How to get a ‘yes’ when the banks say ‘no’ to your finance

Posted by: Danielle Moore at April 01, 2021

Developments over the past few years have resulted in some major changes in the Australian lending market. Tighter serviceability requirements and new macro-prudential measures introduced by the mainstream banks since 2018 have led to a reduction in credit supply. This has meant more businesses being turned down for finance.

In this post, we’ll explore options when the banks say ‘no’ and how non-bank financing is becoming an increasingly attractive alternative.

Here’s what we’ll cover:

Significant funding shortfall in Australia

According to KangaNews, the Financial System Inquiry, lending ‘speed limits’ and the Hayne Royal Commission have led to a significant funding gap of around A$116 billion for commercial and residential lending. This makes up more than 20% of the total annual market volume in these sectors.

In 2019, this resulted in the total loan value of Australia’s major banks declining 12.5%. This wasn’t a reflection in the amount of finance being sought, though, as demand continued to remain strong. In fact, according to the Australian Banking Association, 60% of business owners said access to funding had stifled their plans.So, where are business owners and managers turning when the main banks say ‘no’? The answer is non-bank financing. To illustrate this, non-bank lenders’ share of the commercial real estate debt market hit record levels in 2020 – rising 5.9% over the year – and it’s forecast to surge over the next three years to hit more than $50 billion by 2024.

Australian non-bank sector growing, but underutilised

Although statistics like these demonstrate strong growth in Australian’s non-bank sector, this source of funding is still heavily underutilised compared with other OECD markets. In the US, for example, 85% of allocated financing is private – the reverse of the situation here in Australia.

Fabrice Guesde, Head of Global Structured Credit Solutions, Asia Pacific NATIXIS, says the shift to non-bank lending is a strong global trend. “Australia is unusual in how small its non-bank market share is,” he says. “Disintermediation around the world has led to at least 15-20% market share for non-banks. There is no fundamental reason why this trend should not reach Australia,” he adds.

Despite coming off a low base, the non-bank sector in Australia has grown strongly over recent years as the public’s perceptions towards it change. According to The Adviser, the non-bank proposition has become increasingly attractive to many borrowers recently.

One of the key reasons is that non-bank lenders’ individual approach to credit assessment means they can facilitate loans that don’t fit into the ‘cookie-cutter’ approach of the big banks with their credit scorecards. Non-bank lenders are able and willing to help customers that the traditional banks no longer choose to.

With the ‘big four’ Australian banks raking in profits of around $30 billion each year, they hold a dominant position in the lending landscape and can pick and choose which customers they choose to service. Savvy business owners and managers whose plans were previously kiboshed after being turned down by their bank are fast realising the benefits that non-bank lending offers.

4 strong reasons to consider non-bank lending

1. Simplified application process and faster settlement

Due to their smaller size, non-bank lenders don’t have large hierarchical structures and multiple levels of approval. This means they can usually assess and respond to loan applications more quickly than a traditional bank.

2. Better conditions and more flexibility

Non-bank lenders individually assess each application based on its merits – not the templated, ‘cookie cutter’ approach adopted by the big banks. This provides loan options and interest rates suited to the borrower’s unique circumstances – especially those who don’t fit the strict lending criteria applied by the banks.

3. No property as security

Customers are increasingly wanting to avoid putting their property up as security against a loan, with 21% of businesses in a 2019 survey stating this was the reason they looked elsewhere than a main bank for their finance.

4. Better customer experience

In the past, consumers showed enduring brand loyalty towards their banks, but the diversification of the finance market has shown them they now have options. While exploring these options, many are finding the customer experience at the big banks doesn’t match up to that offered by more flexible and customer-focused non-bank lenders.

Rebus Capital can help you source funding when the banks say ‘no’

Rebus Capital offers finance solutions and advisory for corporate and specialist industries. The industry insights we provide will help you go into a non-bank funding application ‘match fit’ and set up for success.

We also provide access to funders other than traditional banks, who can potentially offer more flexible finance options. We will work with you to develop a deep understanding of your business and business needs, so we can match you with the best funders from our carefully selected network.

If you’ve been turned down for funding, have concerns you’re not  in the best position when it comes to capital structure, or you need some specialist advice to prepare for upcoming capital financing, Rebus can help by providing an initial capital review.

We provide an independent, unbiased review you can be confident you’re getting focused time with a business financing specialist. We’re committed to meaningful, long term relationships with our clients, built on mutual trust and respect.


Get your balance sheet working for you. Get in touch with Rebus to get your business match fit for future growth.

Danielle Moore

The Trustee for the Rebus Capital Partners Unit Trust ABN 88 452 904 420. Authorised Credit Representative 523233 under Australian Credit Licence 536100.