With brokers accounting for a record 70% of all new residential home loans, more are looking to venture into commercial lending space in hopes of repeating that success.
Nick Reily, head of partnerships at OnDeck Australia, and John Clifford, head of third party at Lumi, spoke about the opportunities that await brokers in small business lending.
Read more: Small business pulse strong at non-banks
“There is no reason why brokers can’t play a very important role in connecting small business owners with the right funders who can provide much-needed access to capital, both short-term and long-term,” Reily said. “Small business owners are notoriously time-poor, and as business conditions pick up, we believe many will turn to a broker for support in organising finance.”
With one in four small business owners being home loan customers first, what brokers need to do to diversify is simply to leverage their existing relationships. Sectors within small business that are leading the way include construction, accommodation and food services, retail trade, professional services, and manufacturing.
With the repercussions of COVID-19 continuing to affect the types of funding being sought, transport-related businesses and businesses that are adjusting to new ways of working have seen a big rise in applications for finance.
“There's been a sharp increase, particularly in the professional services sector, in machinery and equipment purchases following the pandemic’s start,” Clifford said. “Many businesses were required to adapt technologies to support remote and hybrid work environments quickly.”
Restaurants and cafes are another bright spot.
“As can probably be seen on nights out in our major cities, hospitality is returning in a big way,” Clifford said.
Clifford said it is up to brokers and accountants to inform small businesses of the solutions available to them in the new, more challenging economic times ahead.
“Accountants and brokers are well placed to support businesses in a rising interest rate environment,” he said.
