Businesses’ cash flows are greatly impacted by external factors, such as increased cost of goods, higher operational expenses due to rising fuel costs, or general destabilization, said Peter Vala, Thinktank general manager.
Read more: A new phase in commercial lending
These companies find it difficult to demonstrate consistent and reliable income via traditional financial statements due to lockdowns and a stop-start economic environment.
“If cash flow is an issue, we will always try to help where we can,” Vala said.
One example of how Thinktank demonstrates its flexibility is through its Mid Doc product, which offers alternative forms of income verification should past financial statements not present a true measure of current trading performance.
Vala said it only requires “a self-certification income declaration, along with one other form of supporting documentation.”
Potential interest rate hikes also have some lenders concerned about borrower serviceability ratios and the prospect of annual reviews and property revaluations for commercial facilities.
In such a market, Vala said Thinktank’s long-term “set and forget” approach is a strength, with no covenant reporting or regular revaluation requirements.
“If the property market softens for whatever reason, our loan products remove the risk and inconvenience involved in borrowers needing to restructure their debt or pledge additional security,” he said.
Commercial lending accounts for over 60% of Thinktank’s origination profile. The non-bank is also exclusively associated with the third-party channel and has strong relationships with brokers and aggregators.
Vala said the market for commercial property finance is likely to continue quite solidly over the next year, especially within the industrial space. He said commercial is an excellent way for brokers to strengthen and deepen relations with customers because the duration of a commercial loan traditionally exceeds that of a residential loan, providing a more consistent and diversified income.
Vala also said there is an area of opportunity in commercial SMSF lending across the full spectrum of retail, office, industrial, and professional suites.