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Non-bank lender
Also called alternative lender, fintech lender, private lender, non-bank funder.
A funder deploying its own or investors' capital without a bank charter, and therefore without deposit funding or the bank supervisory regime.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Capital comes from somewhere other than deposits: equity, private credit funds, warehouse lines from banks, or securitisation. That cost of capital is higher than a bank's, which is a structural reason - not the only one - that pricing is higher.
The trade for the borrower is speed, documentation and appetite. Decisions run on bank data and automated models rather than committee, files close in days, and businesses that fail bank criteria on one point get funded on the strength of cash flow. The trade against is price and rigidity.
Regulation is thinner but real. Several states require licensing for commercial lenders or brokers; a growing number now mandate specific disclosures on commercial financing, including sales-based financing, with the required content and thresholds differing state by state. Federal law reaches these transactions through the Equal Credit Opportunity Act and Regulation B for credit applications, through unfair and deceptive practices authority, and through the small business lending data rule as it phases in. Which of these applies to a given transaction depends on the state, the product size and whether the deal is characterised as credit or a purchase.
Where this one catches people
No bank charter does not mean no rules, and it does not mean no supervision either - a non-bank funded by a bank warehouse line inherits that bank's restricted-industry list and its compliance requirements. When a funder says it cannot do something at any price, the constraint is often upstream and genuinely immovable.
Where you will meet this term
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Non-bank lender — common questions
What does non-bank lender mean?
A funder deploying its own or investors' capital without a bank charter, and therefore without deposit funding or the bank supervisory regime.
Where does non-bank lender catch people out?
No bank charter does not mean no rules, and it does not mean no supervision either - a non-bank funded by a bank warehouse line inherits that bank's restricted-industry list and its compliance requirements. When a funder says it cannot do something at any price, the constraint is often upstream and genuinely immovable.
Is non-bank lender the same as an interest rate?
Non-bank lender is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does non-bank lender apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit, Revenue-Based Financing.
Is there a worked example of non-bank lender?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside non-bank lender?
ISO agreement, Merchant cash advance, Microloan, Mid-prime, Restricted industry.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.