Brokers are always on the lookout for chances to add to their proposition, and many are leaving cash on the table by ignoring the potential that lies within commercial lending.
Australian Broker sat down with some of the biggest names in the SME lending space, both non-banks and fintechs, to ask them their thoughts on how brokers can expand their offering, and what lies in wait for them if they branch out.
Commercial lending offers brokers an additional avenue for income, enhanced client retention, and greater network expansion, said Peter Vala, general manager partnerships and distribution at Thinktank.
“It also opens up new opportunities through meeting broader customer needs and developing deeper relationships with them and their advisers. Financially, potential income is higher in terms of upfront and trail commission outcomes when compared to residential, while the duration of commercial and SMSF loans tends to be much longer than residential, so the loan and the client stay on the books for longer.”
Lenders are are always adding to their repertoire for brokers.
“Our continued product innovation ensures brokers can help a broader range of customers, including the underserved SMEs,” said John Mohnacheff, group sales manager at Liberty. “As customer demand grows, Liberty will continue to refine our product suite to ensure we support both brokers and customers’ changing needs.”
Pepper are also very involved in commercial lending. “There are three main advantages for brokers who offer Pepper Money commercial products to their customers – quick and in-depth assessment of applications, seamless settlement, and an easy commercial lending process,” said Malcolm Withers, head of commercial.
“Our prime and near prime commercial property loans include full-doc and alt-doc options for customers who need commercial lending solutions up to $3m in loan size. Whether they want to buy an investment property or commercial property to operate their business out of, or access equity and cash flow to support them in growing their business, we have solutions to help them achieve their goals
Fintechs are also very active in the space.
“We’re focused on delivering credit decisions as fast as possible, at the speed of business, which generally means same-day, and often within two hours for loan applications under $50,000,” said Sam Sfeir, head of strategic partnerships at Moula.
“Commonly, businesses come to us for funding to help seize opportunities. Perhaps they have an opportunity to buy stock or supplies at a discounted rate, or have landed a new contract and need capital to put on more staff. Businesses love that we give them the ability to repay funds early, at any stage, without any fees or penalties.”
There are also plenty of specialist lenders, who offer markedly different proposition from big banks.
“Our focus is to provide a relevancy to borrowers who are not accommodated by the majors. It is all we do, quite frankly,” said Dean Koutsoumidis, managing director at Equity-One. “Since we began operations over 20 years ago, our offerings have remained relatively unchanged; that is, interest-only loans for terms of one to five years.”
“Our customers’ needs have not changed in all that time as the majors, unfortunately, cannot cater for everyone. That’s where we come in. Whilst we offer the security of fixed rates, we also do not have any break costs or early termination costs, so it provides borrowers with a short-term commercial solution whilst they are getting all their ducks in a row.”
In the SME and asset finance space, there are as many niche lending options as there are customers.
Donelle Brooks, head of third party at Lend, added: “Lend enables brokers to access a centralised stable of commercial finance solutions and receive aligned funding solutions in real time. This includes a full portfolio of unsecured business loans, secured business loans, asset finance, line of credit, supply chain finance, debtor/invoice finance and private lending.”
Semper are experts in finding bespoke solutions.
“Semper has a reputation for facilitating opportunity and enabling business growth through the provision of highly competitive rates that are weighted fairly against risk, backed by a robust warehouse funding facility,” said Andrew Way, director at Semper.
“We strongly believe that it’s important to keep across the broader macroeconomic and political narrative to stay ahead of the game, as the ‘macro’ moulds the ‘micro’.”
“For the financial services industry, it will dictate the amount and type of finance available to whom. It will open up and close opportunities. And, most importantly, it will shape consumer sentiment, which is arguably the most profound driver.”
This is an extract from a feature story in the latest edition of Australian Broker. For the full story and more see the magazine which hit desks on Monday, 26 July.