Demand for Commercial Mortgage Brokers Grow as Demand for SME Debt Finance Rise

In the same West Australian SME survey, 3.4% of SMEs indicated that they do not know how to finance their next business investment. In another survey conducted by the cloud banking platform Mambu, as much as 50% of respondents claim that they are unable to get sufficient funding for their business.

Not to mention, Scotpac’s CEO, Jon Sutton mentioned another key factor in the SME landscape. Government stimulus has ended and SMEs now need to raise equity. Around 40% of small business are borrowing while around 33% are actively assessing their finance needs.

It’s clear based on the current economic landscape that demand for commercial finance is on the rise. Unfortunately, many SMEs are unable to qualify for traditional back loans.

Application Requirements Remain Barriers to Funding

As is usually the case, traditional finance institutions like banks follow strict serviceability requirements before approving a loan. The reason for this is simple: banks need to make sure that the borrower can afford to pay the loan.

Unfortunately, this ‘one-size-fits-all’ approach in screening tends to alienate many in the business sector.

Many small businesses have seasonal revenue due to the nature of their industry (e.g. resorts boom during the summer season when locals and foreigners look to head to the beach). Banks tend to score lower points for businesses that have considerable lean months. Not to mention, assessing serviceability is a lengthy process.

Small businesses, on the other hand, typically need access to fast financing, especially for needs such as working capital, payroll and the like.

If a business needs to roll out their employees’ salaries soon, then getting stuck in the loan approval process isn’t the most ideal situation to be in.

Increased Need for Commercial Brokers

Brokers who are able to service commercial clients are in a distinct advantage to increase their market share. This is especially true for mortgage brokers who can provide alternative finance options with more flexibility and offer a much faster application process.

While traditional bank finance is where most small business owners go to first, the unfortunate reality is that quite a number of small businesses are unable to qualify for bank loans.

However, their finance needs will still be there, and they will still have the problem of figuring out how to cover their financial obligations.

Mortgage brokers with access to alternative lending options are in a prime position to help SMEs get debt funding quickly.

Advantages of Working with a Private Lender

Mortgage brokers who have access to private lenders can offer more solutions to their commercial clients, should they face difficulty qualifying for traditional bank financing. Below are some of the reasons why private lending solutions can help h small business needs:

1. Tailored Solutions – Unlike traditional bank loans that rely on a standardised checklist for loan applications, the terms of private lending solutions can be tailored depending on the situation of the borrower. This allows for more flexibility in the loan, which in turn helps improve the chances of getting approved.
2. Faster Application Process – Another advantage of not having standard requirements is that the loan application is also much faster. When looking to pay salaries or purchase important equipment for operations, access to fast finance is crucial. To give an example, at Private Mortgages Australia, loans can be settled within 5 business days upon receipt of all outstanding information
3. Shorter Loan Terms (6mos. – 2 yrs.) – Aside from faster access to finance, SMEs won’t have to tie themselves to long loan terms leaving them in debt for a significant amount of time. And because the loan term is shorter, the overall interest cost is usually less than traditional bank finance where loans can last for more than 10 years.

What business needs can private lenders service?

At Private Mortgages Australia, we offer loan solutions for the following business needs:

• Bridging/Working Capital Loans
• Business Purchase/Establishment Finance
• Business Equipment Purchase Loans
• Equity Release (1st/2nd Mortgage)
• Refinance/Debt Consolidation
• ATO Tax Debt Loans
• Land/Property Finance
• Land Subdivision Finance
• Renovation/Flip Finance
• Development/Construction Finance
• Construction Completion Finance
• Mezzanine Finance
• Residual Stock Loans

What does this mean for Mortgage Brokers?

By providing more solutions to your clients, you not only improve your service to your clients, you also increase the chances of closing more deals for yourself.

At Private Mortgages Australia, we reward successful referrals with upfront commission with no clawbacks.

Our average loan size is $1M. With a 1% mandate fee + 1% referral fee, just one successful referral can potentially earn you an additional $20,000.

If you are interested in PMA’s referrer fees, be sure to visit our referrers’ page here.

About PMA

Private Mortgages Australia offers short-term, flexible loans to business clients. Our credit team is readily available to accommodate brokers and borrowers alike. We pride ourselves on our quick response time.

We also provide generous referrer fees within 24 hours of a loan settling with no clawbacks!

If you are a broker and have a business lending scenario you would like to discuss, feel free to contact us or you can complete our Quick App form here (< 10 mins)