Quick answer
A non-bank lender is a business that lends money but isn't an authorised deposit-taking institution, so it can't take deposits from the public. Instead it funds loans from wholesale markets, securitisation, warehouse facilities or investor capital. In Australian business lending, non-banks include fintech, asset finance, invoice finance, caveat and private lenders, and they often fund deals banks are less active in.
Key points
- Not an authorised deposit-taking institution (ADI), so no customer deposits
- Funded by securitisation, wholesale warehouse lines, investor funds and private credit
- Conduct is overseen by ASIC; APRA prudential rules for banks don't apply in the same way
- The RBA reports non-banks have grown their share of smaller SME loans since 2022
The dividing line is deposits. Banks, credit unions and building societies are licensed by APRA as authorised deposit-taking institutions, and APRA keeps a public register of them. Any lender not on that register, however large, is a non-bank lender. It can lend, but it can’t fund those loans with customers’ savings.
Where non-bank lenders get their money
Because there are no deposits to draw on, a non-bank needs other sources:
- Warehouse facilities: a line of credit from a major bank or institutional investor that the lender draws on to write new loans.
- Securitisation: bundling loans and selling them to investors as bonds, which frees up the warehouse to lend again.
- Investor funds and private credit: money pooled from super funds, family offices, insurers and wealthy individuals, common for property-secured and construction lending.
- Balance sheet capital: the lender’s own equity, more common for smaller fintechs.
The RBA’s February 2026 Bulletin found that favourable wholesale debt and securitisation markets have lowered non-banks’ funding costs, and that private credit is backed by a widening mix of investors. That helps explain why their presence in business lending has grown.
Not sure whether a bank or a non-bank fits your situation? Send us a quick outline and we’ll tell you honestly.
How they differ from banks in practice
| Bank | Non-bank lender | |
|---|---|---|
| Takes deposits | Yes | No |
| Prudential regulator | APRA | Not prudentially supervised like an ADI |
| Typical funding cost | Lower | Higher |
| Credit policy | Broad, standardised | Often narrower and more specialised |
| Speed | Varies; can be slower on complex deals | Often faster on simpler deals |
| Appetite for unusual files | More conservative | Often more flexible |
Banks are great when you fit their box, and they frequently offer the cheapest money. Non-banks fill the spaces around that box. The RBA’s October 2025 small business bulletin noted that non-banks have grown their share of SME lending since early 2022, especially in smaller loans, and that many specialise in areas like vehicle and equipment finance. Its February 2026 article added unsecured SME finance and early-stage construction to the list of areas where banks are less active.
Types you’ll meet in business lending
The label covers a wide range of businesses, from listed companies to small private funds:
- online and fintech lenders offering unsecured and revenue-based finance
- equipment and asset finance companies
- invoice and debtor finance providers
- larger securitised lenders that write commercial property and other secured loans, such as Pepper Money and La Trobe Financial
- private lenders and caveat lenders funding short-term property-secured loans
A worked example
A Townsville electrical contractor wins a $400k council job but has two years of trading, a tax return the accountant hasn’t finished, and a small ATO payment plan. The bank asks to wait for the return. A non-bank equipment financier funds the new van and tools against the assets themselves, and an invoice finance provider advances against the progress claims once they’re issued. The total cost is higher than a bank loan would have been, but the job gets started on time. Once the return is lodged, the owner can revisit the bank for cheaper ongoing finance.
Related terms and pages
Bank said no, or not yet?
If a bank has declined you or wants more time than you have, the non-bank market is often where the answer sits. The hard part is knowing which of its many lenders actually suits your file, which is the work we do.
The enquiry takes about a minute and doesn’t trigger a credit check. Rather than broadcasting your application to dozens of lenders, a specialist here reviews it personally and gives you a call. Fill in the details carefully and honestly so we can steer you to a lender that fits, first go.
Frequently asked questions
Are non-bank lenders safe to borrow from?
As a borrower, your main risk is the loan terms rather than the lender's balance sheet, because you aren't depositing money with them. Check the lender is an established business, read the contract closely and compare the total cost in dollars.
Do non-bank lenders cost more than banks?
Usually, though not always. Their funding costs are generally higher than a bank's deposit funding, and they often take on riskier or faster deals. Where you meet bank criteria, the bank is often the cheaper option.
Is a non-bank lender the same as a private lender?
Not exactly. Private lenders are one type of non-bank, typically funding loans from individual investors or a pooled fund, often secured by property. 'Non-bank' is the wider group that also includes large securitised lenders, fintechs and equipment financiers.
Can I refinance from a non-bank back to a bank?
Often, yes. Many owners use a non-bank to solve an urgent or unusual need, then move to a bank once financials are up to date or the issue that caused a decline has passed. Check exit fees before you sign.
Are non-bank lenders regulated?
Yes, though differently from banks. ASIC oversees conduct and licensing where it applies, larger non-banks report lending data to APRA, and many belong to AFCA so customers have access to dispute resolution.