Non-Bank Lending

Non-bank lending involves borrowing from financial institutions that are not banks, such as credit unions, building societies, or private lenders. These lenders often offer more flexible terms, quicker approvals, and tailored solutions compared to traditional bank loans.

Here are some examples of non-bank lending applications, where main bank options are unlikely to be available:

Bridging finance where there is no guarantee of repayment of lending and thus proving satisfactory servicing becomes a real issue. We call this ‘open-ended bridging’ and although it can be convenient to buy first, and then sell your property, it may come as a surprise that even though your ‘end position’ works well within bank criteria, the fact your existing property is not in fact sold (unconditionally) at the time you purchase or wish to, the bank could make this challenging if not impossible to obtain approval. We take a pragmatic approach by looking at whether we can try the banks and will produce a well-presented file for their consideration. We will also discuss what non-bank options may exist.

If you are newly self-employed (have less than two years’ worth of formal financials), or possibly you have had a blip year (have earned materially less than in previous years) you may struggle to have finance approved by a mainstream bank. We can look at alternatives.

If you are asset rich and cash poor and wish to raise finance, you will probably need a non-bank lender to provide approval. With changes to the CCCFA at the end of 2021, if you are deemed to fit within CCCFA lending criteria, obtaining lending even from non-bank lenders can prove challenging – we will give you a transparent and professional opinion on this as early on in the piece as possible.

You may have a credit rating impairment such as resolved or unresolved credit adversity. You may be discharged from bankruptcy or have undergone a non-asset procedure. This list is not exhaustive. The banks tend to take a hard line on credit impairment issues, even ones that are repaid that could have been a few years ago.

You may not have an indefinite returning resident’s visa for New Zealand and seek a low equity loan.

Tax debt. Many self-employed Kiwis (in particular) may find themselves in situations where they owe the IRD money and therefore will want to borrow money to clear the debt. It can work out less costly to borrow money from a non-bank as opposed to paying IRD penalty interest and fees. People can end up having debt with the IRD for a number of reasons and we recommend consulting with your accountant or other qualified tax professional for guidance in managing tax obligations.

Benefits of non-bank lending include flexible credit criteria, faster processing times, and customised loan options. Non-bank lenders may also be more willing to work with borrowers who have unique financial situations or less-than-perfect credit histories.

Consider non-bank lending if you need a customised financial solution, faster access to funds, or if you've faced challenges securing a loan from traditional banks. A financial advisor can help you evaluate your options and determine if non-bank lending aligns with your financial goals and needs.