Commercial lending specialists fill gap for mortgage brokers

EOFY a good time to diversify offering

Commercial lending specialists fill gap for mortgage brokers


By Ryan Johnson

Non-bank lenders are the go-to service for brokers needing fast financing for their SME clients before the end of financial year, according to Yuan Chong, co-founder of disruptive brokerage Sqale.

His comments come at a time where mortgage brokers are frequently looking to diversify their services amid a tough economic backdrop. 

The number of mortgage brokers also writing commercial loans has recorded a significant increase in recent years.

MFAA data showed commercial loans settled by mortgage brokers hit their highest-ever value at $17.2 billion, up 28.6% year-on-year between April and September 2022.

Chong (pictured above left) said the vision for Sqale was to assist mortgage brokers looking to diversify into commercial lending but who might not know the landscape well enough to venture in alone.

“Sqale is a broker’s broker,” Chong said. “What we do is support other mortgage brokers and accountants in helping their self-employed clients with business finance.”

Chong said Sqale differed from other online platforms and comparison sites because it took  an “advisory approach”.

“What that means is we will assess the client first either directly or indirectly through the mortgage broker to determine what kind of lending options that we can potentially obtain for the clients so we can set the expectations up front.”

Gearing up for EOFY

With June 30 fast approaching, small businesses will need the support of their brokers to act fast and take advantage of the available tax breaks.

But with traditional banks adhering to stricter standards and therefore taking longer for loan approvals, the deadline may have already slipped away.

“This end of financial year, businesses can get great discounts. But, for example, they might not be property backed or they might have an ATO debt, and as a result, they can’t go to the bank,” Chong said.

Cameron Poolman (pictured above right), CEO of non-bank lender OnDeck Australia, agreed. He said it was one thing to have a tax break available, but as brokers knew, small businesses often needed funding to take advantage of deductions such as temporary full expensing.

“We have pulled together strategies that may allow small businesses to enjoy a tax break this financial year,” Poolman said.

One such strategy is OnDeck’s Lightning Loans, which offers a fast-tracked application and approval process for loans up $150,000 with funding decisions taking no longer than half an hour.

“OnDeck understands the need for speed at this time of year, and our Lightning Loans can help brokers and their small business clients tap into those last-minute tax deductions,” said Poolman.

Chong said a commercial lending specialist such as OnDeck worked for brokers on several levels. 

“A broker might be working on securing a loan for a small business to secure a commercial property. In a situation where the valuation on the property comes up short, and there is a gap, and they need bridging finance fast, where else can they go?” he said.

“Or it might be where a business is acquiring another, and they have taken money out of the business to make this move. This might the business with a very thin cashflow buffer, and an online lender such as OnDeck can come in and help.”

Supporting to the need to diversify

Commercial finance remains a significant opportunity for mortgage brokers to expand their existing offering to both their home loan clients and new clients.

A recent OnDeck business survey showed the demand is there, with 60% of businesses saying they would consider using a broker for their future financing needs.

But Chong said for many brokers, the barrier between mortgage lending and commercial lending was quite high.

But he said when brokers worked in tandem with non-bank lenders such as OnDeck and specialised finance partners like Sqale, the transition was easily managed.

“I’m actually a fully qualified mortgage broker but even I wouldn’t dare writing a home loan for myself. I wouldn’t have the experience or the knowledge,” Chong said.

“That’s what we do for mortgage brokers in the commercial space. We operate as a division in their business to offering commercial lending to commercial clients. That’s all we do and we’re good at it.”

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