My bank vs fintech lender

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There are certainly advantages for both institutions. We are all familiar that the banks offer the lowest rates. What we have also experienced is the application process is arduous and turn around time could take weeks or even months.

“Small companies needing a 30 day loan term might have to wait up to 30 days for it be approved by a mainstream bank” David Gandolfo, president Commercial Asset Finance Brokers Association of Australia.

Main advantage of a fintech lender is:

  • Speed of delivery
  • Simple & easy application process
  • Unsecured debt

While an unsecured debt is not as cheap as the main banks, it offers business owners more options to grow their business.

Speed of funding enable a business owner to seize opportunities within a short time frame they otherwise would pass on had they gone to their banks. It could be a development project, purchase of a business, supplier sale of goods or buying out a business partner to name a few.

The nature of unsecured debt is a great feature that now offers business owners the ability to access funds:

  • When they don’t have any security to offer ie house or equity
  • Comfort of not placing family home at the risk of the business
  • Mitigate issues within a business with multiple Directors with different shareholding not wanting secured debt

The most important question to ask yourself when deciding if an unsecured loan is right for you:

  • What is the cost of the opportunity?

Once you have determined what it means to your business and the return on investment you can then make a sound decision. Speak with your accountant as there could be write offs from the interest cost with this loan.

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