Commercial lending still going strong

by John Mohnacheff25 May 2020

Despite a challenging landscape, the commercial lending armof our business has continued to thrive. Just like in the residential arena, brokers provide genuine choice – and this is a vital and missing ingredient in commercial lending.

Brokers introduce to clients a vast array of products, services and fintech lenders that borrowers may not be able to access by going to a bank.

The tightening of lending criteria that occurred after the banking royal commission made it harder for commercial borrowers to access finance, but brokers worked hard to find solutions to suit their customers’ needs. When the dust began to settle, our country experienced the most devastating bushfires in living memory, but still, brokers pushed through.

Now, as the COVID-19 situation unfolds, we as an industry can expect to face further challenges. However, by remaining agile and continuing with our free-thinking approach to finance, Liberty is well placed to support brokers to come out on top. For example, Liberty has been accepted into the Australian government’s SME Guarantee Scheme and has launched an unsecured loan product to support affected businesses, providing loans of up to $250,000 for a maximum of three years. Our new Business Care product offers the option to defer repayments forthe first six months, until small businessowners are back on their feet.

With a growing market, an increasing number of mortgage brokers are stepping into the commercial lending space – and they’re being rewarded for doing so. Part of the reason we’re seeing more brokers moving into this area is because there are so many opportunities. From opening new shopfronts to purchasing o ce space, there are many reasons why a customer may seek commercial finance, and there is  certainly no shortage of customers.

Given the unprecedented nature of the virus, there is no telling just how serious the effects on our industry will be. As the COVID-19 situation has unfolded, we have maintained regular communications with our business partners. Although we cannot currently meet face-to-face, we still strive to achieve personalised contact through video chats and digital platforms.

While it is certainly an unusual time, most brokers are in a fortunate position of being able to continue operating without the same level of disruption that many  other industries will face. Although there are likely to be interruptions to some degree, technology allows brokers to work remotely, while still engaging with customers over the phone, via email or through video chat. We truly believe in the value of diversifi cation, and our BDMs are always available to support business partners in moving into other areas of lending.

Broker market share of commercial lending is comparatively low – and the market itself is far from crowded. This means there is ample opportunity for ambitious brokers to move in and make a diff erence

Currently, the broker channel holds the highest market share of residential home loans on record, sitting at close to 60%. With the steady demand for specialised lending support, we can expect this uptick to continue. However, despite a steady increase in the number of brokers moving into commercial lending, broker market share of this type of lending is comparatively low – and the market itself is far from crowded. This means there is ample opportunity for ambitious brokers to move in and make a diff erence.

The fact is, residential is a super competitive market, and it can be di cult for brokers to compete with some of their more established competitors, especially if they are just starting out. With plenty of room to move, commercial lending can be an excellent way for brokers to boost their business and break into a relatively underserviced market.

At Liberty, we promote the benefits of commercial lending with training events and workshops, like our ‘Do More’ sessions. These sessions explain the fundamentals of commercial lending, and support brokers in taking the first steps towards moving into this area.

If you’re considering breaking into commercial lending, there’s never been a better time to take the plunge. Those who get in early are likely to see the greatest gains. At Liberty, we know there can be anxieties around moving into new areas of lending, which is why our BDM team offers extensive support to brokers through the transition period and beyond.

Like learning any new skill, it’s important to receive the best training and support. We have more BDMs than any other non-bank lender, so we’re equipped to take a hands-on approach and offer the personalised support brokers need to succeed.

John Mohnacheff, Group sales manager, LibertyJohn Mohnacheff
Group sales manager,
Liberty