The Non-bank finance might sound like a new term to you, but it is an excellent method in which various non-banking finance companies can provide the people with few banking services, though they are not legally a bank. Various type of institutions can work as the non-bank finance organizations; and some common examples are the pawn shops, insurance firms, the Hedge funds, currency exchanges, check cashing services, the payday lenders, etc. some of the advantages of these non-bank financial institutions are listed below.
Advantages of The Non-Bank Finance Organizations
- They are much more flexible compared to the traditional banks.
- No government banking laws apply to these non-banking companies.
- Terms are not one-sided; they are on a win-win basis always, so both the customers and the company gain profit out of it.
- If you take a loan from these companies they are approved quickly, and there are no artificial lending limits specified.
- They are usually secured, and the lender in these companies is always willing to take the risk.
Types Of The Non-Bank Finance Support You Can Avail For Your Business
If you are a businessman that needs quick loans, then these companies are the best way out. They might have interest rates which are lower than the traditional banks, and they are easier to avail. So always a great choice! –
- The Commercial Loan Providers – They are also known as the non bank finance organizations, and they provide benefits like giving loans and credit facilities. The catch is that they do not have any banker’s license. Thus, they cannot provide the public with the other facilities that normal banks give like overdrafts. So they are less restrictive when it comes to their lending criteria.
- A Social and Community-Based Lending – Borrowing money from credit unions fall under this category. They are usually a lot more affordable than taking a bank loan. Numerous lenders provide loans to the community businesses, disadvantaged groups, and various social enterprises, etc.
- A Partnerships and Joint Ventures – If you need to increase the resources then one of the easiest ways is to enter into a joint venture with some other business. This has numerous advantages like the increased capacity, greater technical expertise, operation on a wider field, more markets and lastly more capital. So they are also a kind of non-bank finance where one company helps another with the money and other needs.
- Invoice Discounting and The Factoring – You can raise funds against the invoices that are unpaid. All of the methods like discounting of invoice, supplier finance, factoring, etc. have a great impact on your business and improves the business cash flow.
- The Equity Finance – To raise long-term funds the best way for your business is to sell the shares. These can raise the long-term money required to run your company. Some of the sources of income that fall under this category are the stock market angles, venture capitals, etc. One drawback of the same is that the ownership will be partly given away to someone else.
- The Crowdfunding – In this method all the people associated with your business contribute a certain sum of money to raise a target fund. These involve setting up a project profile on the official website and use various social networking sites on the internet to raise funds.
So, these are some of the common methods by which you can avail the quick cash instead of going to the traditional banks with the high interest rate. The advantages of them are too good to ignore.