Beyond Banks: Alternatives for Small Businesses

While traditional banking continues to be the primary source for commercial lending, small businesses are beginning to take advantage of other nonbank alternatives. In fact, according to a Secured Research study, over 70% of small businesses said they shopped around to find the best loan terms from nonbank lenders. There are good reasons to recommend maintaining a relationship with a brick-and-mortar bank. Banks typically offer lower interest rates, can grant access to other financial services or can provide extended repayment schedules.

However, banks have strict rules for lending, often requiring excellent credit scores. The loan process can be lengthy and time-consuming to provide all necessary documentation. It was found that only 10% of small businesses have up-to-date and accurate documentation to satisfy banks. Banks often lack the flexibility to adjust repayment terms.

Nonbank lenders are there to tailor financing needs for the client in the commercial banking space. One of the reasons why they are growing in popularity among small businesses is that they are more willing to extend loans to startups or businesses with less-than-stellar credit scores. For businesses with immediate needs, nonbank lenders can cut through the red tape and streamline the approval process for a quicker decision. On average, traditional lenders take 32 days to reach a decision, while nonbank lenders take only seven days. Additionally, these lenders are often willing to bank on the future potential of the company rather than on its present credit scores.

Consider carefully

There are downsides to consider when deciding whether a nonbank lender loan is right for your business. For example, you can expect significantly higher interest rates and fees when compared to a bank loan. Since the nonbank sector is not regulated in the same way traditional banks are, there may be less recourse for the borrower if a dispute should arise. Borrowers may find that nontraditional banks might not have dedicated staff to speak with them directly about their specific financial situation. However, traditional banks usually reserve such personalized relationships for a few high-value customers.

On its website, the U.S. Chamber of Commerce has offered a list of reputable nonbank lenders for small businesses to consider. They are as follows:

• Accion is a nonprofit that helps build innovative companies through investing capital and providing strategic governance.
• Fora Financial has provided funding for more than 55,000 small businesses.
• Fundbox is known for its speedy approval process. A paperless application submitted by a small-business owner or entrepreneur can be approved in as fast as 3 minutes, with the funds sent as soon as the next business day.
• National Funding offers various funding and equipment leasing options for small-business owners and entrepreneurs to help expand their business.
• SBG Funding is a niche business finance firm that helps small-business owners secure the funding they need via flexible financing solutions.

Small businesses seeking additional capital no longer feel locked into borrowing money from a traditional bank. With the rise of nonbank lenders, small-business owners have alternative ways to secure a loan that can be quicker and more flexible than going the conventional bank route.

The bottom line? You have more choices than you think. Be sure to work with an independent financial professional to help you make the right decisions.

© 2026