What's happening with commercial loan activity?

Non-bank sheds some light

What's happening with commercial loan activity?


By Jayden Fennell

The commercial lending market is performing well, with government stimulus helping to boost demand for construction and development loans, according to Aquamore.

The non-bank lender has been funding small to medium businesses with short-term property-backed loans since 2016

Aquamore head of third-party distribution Matthew Porch (pictured) said with the federal election looming, the government was pinning its hopes on how well it managed the economy throughout the pandemic.

“The market is performing well with an increased demand for consumer loans, and expediential enquiry coming through during the last three to four months,” Porch said. “This will only increase and grow as confidence remains strong things will be staying open.”

Porch said the volume of government stimulus was unprecedented and because so much money had been pumped into the economy, commercial construction and development finance loan applications were arriving thick and fast.

“Fixed build contracts are now 20% more expensive than 12 months ago, so inflation pressures and industry confidence for SMEs to borrow money is building,” he said.

“SMEs want to lend money to expand on new staff, new resources and manage market risk along with stagnant wage growth and rising living costs.”

Porch said the east coast of Australia had performed quite well despite recent challenges, with drastically increased property prices in areas such as Byron Bay and Kingscliff on the northern NSW coast.

“With working from home embedded into everyday life for most people, demographics are shifting away from cities and people’s housing needs have changed,” he said.

“People are looking for larger pots of land, dedicated work from home space, an area for a nice garden.”

Porch said with relocation to regional areas, city businesses were negatively impacted with less foot traffic and restaurants and cafes were now hurting once again.

Aquamore has noticed an unprecedented demand for short-term commercial products driven by the major banks’ lack of focus on commercial lending.

“With bank turnaround times leaving so much to be desired, there is a saturation of countless private lenders and second-tier lenders to hoover up the space major lenders have left behind,” Porch said.

“People are starting to realise how important their time is, so when clients come to us because they don’t have time to sit with major lender for a longer amount of time, we take the commercial mindset towards our approach and take advantage of that which benefits our customer.”

Porch said he was seeing a high volume of new lending applications from the hospitality sector, including applications for new bars, cafes, restaurants, and nightclubs off the back of consumer confidence.

Aquamore predicted further growth within the commercial lending space in 2022.

“With the cash rate expected to rise later this year, having cash in the bank not providing the returns like it used to, and the volatility of the stock market, people can turn to private lending and know they will get their money back plus a decent return,” explained Porch.

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