Diversifying To Commercial Lending A Must for Brokers With Lodgements Down

On the flip side, the Mortgage & Finance Association of Australia (MFAA), which has tracked brokers writing commercial finance since 2017, has indicated that the number of brokers writing commercial finance have since doubled.

It’s clear that demand for commercial lending is trending upward, and this sector is still largely untapped by brokers compared to the home loan market, making it a viable space for mortgage brokers to grow their business.

Understanding the commercial space

The same Broker Pulse survey mentioned that non-bank lending sentiment increased by seventy-seven per cent from July 2023 to August 2023 with eighty-three percent of their respondents indicating positive feedback with private lenders.

While serviceability requirements of traditional finance institutions remain to be a challenge for SMEs seeking finance, the current sentiment in the market has slowly shifted, with more people considering private finance options. This is because some private lenders are purely asset lenders, so brokers will not be required to provide any evidence of the client's loan servicing capacity to get an approval.

Therefore, mortgage brokers that are able to present traditional financing options and alternative financing options have an edge when servicing commercial clients.

Diversifying into commercial lending: how feasible is it?

Yes, it’s easy to see why diversifying makes sense. But how feasible is it to diversify to commercial lending? Is it possible to make the immediate switch to capitalise on the growing demand?

The answer to that is yes, it’s absolutely possible to diversify to the commercial space immediately. And you can do so by first partnering with private lenders. For instance, at PMA, we offer referral fees to mortgage brokers who are able to refer business clients. Even if a broker has no experience with commercial lending, our relations team will be assisting both the broker and the borrower in each step of the way.

If a loan is settled, the mortgage broker receives a referral fee within 24 hours after the settlement with no clawbacks.

Moreover, PMA is channel agnostic. If that referred borrower goes to PMA directly for another loan, the original referrer still gets paid a commission for that new loan.

Referring commercial clients is a great way to enter commercial lending. Even with limited knowledge, you give yourself the chance to capitalise on the growing demand for commercial loans.

Therefore, residential brokers can start increasing their revenue through referrals while building their knowledge on commercial finance.

If you are a broker and have a business lending scenario you would like to discuss, or, if you have queries on any of PMA’s commercial finance products, feel free to contact us or you can complete our Quick App form here (< 10 mins).