Rate cut helps customer sentiment but non-bank lenders started moving weeks ago
Following the Reserve Bank of Australia’s (RBA) announcement to reduce the cash rate from 4.10% to 3.85%. Valiant Finance believes the broader story lies in who is actually providing finance to Australian businesses, and it’s increasingly not the major banks.
“While the RBA’s rate cut is good news for small businesses, what’s really interesting is that we’ve already seen a number of non-bank lenders getting very competitive. The last week or two have already dropped rates between 20bps and 100bps across a range of products. That means more options and better deals out there for business owners looking for funding,” said Alex Molloy, Co-Founder and CEO of Valiant Finance.
“Beyond reducing the cost of finance, a rate cut like this boosts how people feel. More confident customers are more likely to spend, and that’s what our small businesses really need. It’s not just about the borrowing side getting a bit easier; it’s about the potential for more business coming through the door too,” Molloy explained.
According to Valiant’s latest internal data showing bank vs non-bank lending (graph below), just 2.84% of loans originated through its platform in the last quarter came from traditional bank lenders, a noticeable drop from 3.56% in the same period last year. The remaining 97%+ was delivered by non-bank lenders.
This shift has been driven by a decade-long tightening of capital requirements and increasing regulation, making it less attractive for banks to engage in more complex or higher-risk forms of lending. This includes sectors such as commercial property, auto finance, and non-standard SME lending, where traditional models fall short.
“Why the shift? There are many contributing factors. But the standouts are speed, smarter credit decisioning that looks beyond legacy metrics, and industry-specific expertise. Today’s alternative lenders are not just filling a void, they’re redefining what business lending looks like.
Valiant Finance, which connects businesses with both bank and non-bank lenders, is uniquely positioned to observe this trend. Its platform has facilitated over $2.5 billion in loans to more than 20,000 Australian SME and handles thousands of loan applications every month, offering a clear line of sight into lender behaviours and borrower preferences.
“Far from being lenders of last resort, non-bank lenders have evolved into a $20 billion ecosystem comprising peer-to-peer platforms, fintech marketplaces, and specialist financiers,” Molloy said. “Together, they’re providing tailored solutions for working capital, equipment finance and more supporting the very businesses traditional banks are increasingly stepping away from.”
Valiant expects this shift to continue, particularly in a rate-cut environment where businesses will seek more competitive and flexible options for funding growth and managing cash flow.
