Non-bank lender

Definition

An SBA lender that lends its own capital and takes no deposits.

Why It Matters

It is the smallest of the four kinds of lender in this market and the one worth knowing about when a bank says no. Without depositors it answers to its own investors, which usually means a wider credit box, a faster answer, and a higher rate for the same paper. The license is the thing to check: only a limited number of these hold the SBA authority to make 7(a) loans at all, so ask whether the firm lends or brokers before you send a file, because the two answers mean completely different things about who is deciding.

In numbers: A non-bank lender funded by its own capital can hold a $4.5M acquisition loan a deposit-funded bank turns down, and it prices the risk accordingly.