Why 72% of Small Businesses Are Turning to Non-Bank Lenders
The world of small business lending is evolving—and fast. According to a recent article published by Small Business Finance Insights, 72% of small businesses now report receiving better financing terms from non-bank lenders than from their traditional banking partners. The data, sourced from a comprehensive study by Secured Research, reveals a significant shift in how business owners are accessing capital—and why non-bank lenders are leading the way.
Traditional Banks Are Falling Behind
The study tracked over 2,000 small businesses with revenues between $500K and $5M. While banks may still advertise lower interest rates, the full cost and experience of financing tell a different story:
Speed to Funding: Non-bank lenders averaged 7 days from application to disbursement. Traditional banks averaged 32 days.
Approval Rates: Non-banks approved 67% of qualified applicants, compared to 41% at banks.
Documentation Requirements: Non-banks required 78% fewer documents.
Flexible Structures: 84% of non-bank lenders offered custom repayment schedules, compared to just 23% of banks.
Perhaps most revealing: non-bank lenders showed a 1.3% improvement in terms for returning clients, while banks offered just a 0.25% loyalty benefit. This indicates non-bank lenders are more effectively leveraging performance data to reward reliability.
The Data Advantage
According to Secured Research, three key technology trends are driving the performance gap between banks and non-bank lenders:
1. Real-Time Financial Analysis
Non-bank lenders integrate directly with accounting platforms and payment systems, enabling live insight into business performance.
2. Behavioral Analytics
91% of non-bank lenders assess digital engagement metrics—such as online reviews, website traffic, and social presence—as part of their credit models.
3. Predictive Algorithms
AI underwriting tools used by non-bank lenders are 37% more accurate at predicting repayment risk compared to traditional credit scoring models.
A Case Study in Contrast
One mid-sized manufacturer, with a 15-year banking relationship, approached their bank for a $350,000 equipment financing request. Despite a long track record of profitability, the bank offered:
30% down payment
Personal guarantees from all partners
Three years of tax returns
A 4+ week processing time
No discount for loyalty
Working with a commercial finance broker, the company secured a better offer from a non-bank lender in just 4 days:
10% down, no deposit requirement
Limited personal guarantees
Documentation pulled directly from accounting software
A payment structure aligned with seasonal revenue patterns
Same rate—better terms, faster timeline, and a deal tailored to their business.
What This Means for ElmBlue Clients
The takeaway is clear: access to capital is no longer about how long you’ve known your banker—it’s about how well your business is understood in real time.
At ElmBlue, we believe in matching every client with the lender most aligned to their story. That’s why we:
Work with a diverse network of forward-thinking non-bank lenders
Use technology to accelerate approvals and simplify documentation
Help clients prepare financials in ways modern lenders value most
Final Thought: Finance That Moves at the Speed of Business
As the lending landscape continues to shift, the brokers and lenders who thrive will be those who embrace smarter data, faster tools, and a more flexible mindset. At ElmBlue, we’re here to help you navigate this new era—and secure financing built for your business reality.
Source: “Banking Relationship Paradox: Why 72% of Small Businesses Get Better Terms from Non-Bank Lenders” — Published by Small Business Finance Insights. Research conducted by Secured Research.