When the major banks fail to provide a sense of security (cue the banking royal commission), they lose the trust of their consumers who end up looking for financial advice and partnerships elsewhere.
Big banks may resent admitting that it’s the case, but truth is, non-major bank lending organisations are an important part of the Australian economy. In Housing Finance, they’re 7.4% of the home loan market (Source: Australian Bureau of Statistics, September 2018).
Let’s try to set the record straight on who to trust with your money. Here are some major truths about non-major banks that may come as a surprise:
The only people looking for or receiving loans from non-major bank lenders have problematic credit histories
Non-major banks deal with exactly the same breadth and variety of customers that banks do, from the self-employed to first-home-buyers and established property investors.
They can consider loans for people that banks might reject, but that doesn’t mean they’re less stringent with doing their homework. If anything, non-major bank lenders have more flexibility to go in-depth, and can go the extra mile to assess potential customers whom wary behemoth-banks may write off into the ‘not-worth-the-bother-checking’ basket.
Loans from non-major bank lenders have unreasonable credit rates, and are expensive
It’s a tough market out there. If you can’t compete, you won’t last long. This means if non-major bank lenders aren’t offering rates that keep up with the banks’, they suffer the consequences.
At SFE Loans, every loan application, be it a business loan for a start up, or a commercial loan for investment property, is carefully assessed by our expert team. We ensure we provide the right loan options for the client’s situation and needs, at interest rates that are competitive for them.
Getting involved with non-major bank lenders is financially risky
The global financial crisis and fall-out from lax loaning laws have made it clear why rigorous processes are essential in finance. The takeaway lesson for building robust economies and funds? Dodgy won’t do the job.
The top five non-major banks in Australia control major balance sheets and net assets. They are businesses with excellent track-records and results, led by insightful and talented leadership teams with extensive experience in the Australian lending market.
Non-major bank lenders offer limited options to customers, unlike banks
The rules of supply and demand – same as with the false myth about who is taking out loans from non-major banks – make this impossible.
To stay competitive, non-major banks have to provide a wide range of options for customers. If anything, they offer more flexibility and options because they can develop loan models that are more considered and crafted for customers. Banks sometimes simply don’t have time or interest in doing so.
Regulations don’t apply to non-major bank lenders making them an unsafe option
Non-major banks are regulated by ASIC in exactly the same way that banks are through the “responsible lending” legislation contained in the National Consumer Credit Protection Act 2009 (NCCP).
Further, APRA – the national banking regulator – was granted Reserve Powers in early 2018 to enable it to intervene and regulate non-major banks if ‘systemic’ risk issues arise.
It’s in our interests as a nation to have strict regulations that can inspire confidence in investors. While the furore surrounding the big banks has shaken some of that confidence recently, non-major banks continue to keep the high standards and responsibilities as contributors to Australia’s future.
So rather than write-off non-major banks, it’s worth considering the facts. The reality is, they’re an important part of our economy and continue to offer security and opportunity to our community.
For information related to commercial lending such as how to get commercial loan financing, click here.