23/10/2023

Demand for Commercial Lending on the rise

According to the 2023 Family Business Survey from accountancy firm Grant Thornton, 91% of the 2,000 family-owned businesses they surveyed cited cash flow as their biggest challenge. Economic factors like inflation, the current cash rate calls from the RBA, and increasing costs have made it tricky for many SMEs to have enough liquidity to cover for their operations.

This means that there are a large number of SMEs out there that are in need of assistance from brokers to find solutions to their cashflow problems. Not only is being able to support your small business clients of benefit to them but it also provides brokers a good opportunity to grow their client-base and their potential revenue stream.

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Understanding the needs of commercial clients

Commercial borrowers are very different to residential borrowers. Business operations like payroll, or equipment repairs/maintenance, hiring etc. need to be sorted quickly. Unfortunately, traditional finance institutions like banks have a rigid application process that takes time. They have serviceability criteria used to assess applications before they can approve a loan. Often, the time it takes to approve a bank loan is too long for the purposes of a small business.

As a result, commercial borrowers tend to be more open to non-traditional finance institutions like private lenders that are able to provide flexibility and a much quicker application and approval process than the banks.

Most private lenders don’t require the same serviceability standards as banks and instead, look at the borrowers exit strategy. This allows private lenders to tailor loans specific to the borrowers’ situation.

Therefore, to succeed in the commercial space, it’s important to expand the options available for your clients. Don’t be restricted to just traditional finance solutions because in the commercial space, borrowers need flexibility.

Partnering with private lenders

Partnering with Commercial Lenders The quickest way to start servicing commercial clients is to partner with private lenders that offer finance solutions for businesses. Familiarise yourself with their products so that you’ll know what is available when a borrower comes to you with a particular scenario.

Some of the business finance options on offer from PMA include:

The other benefit of partnering with private lenders is that you won’t immediately need to be an expert in commercial lending. In the case of Private Mortgages Australia (PMA), we have a relationships team that can walk you and your client through the entire process and discuss how best to move forward.

If a successful settlement is made, the referring broker is paid a fee. Therefore, even with minimal experience servicing commercial clients, you’re able to create additional revenue streams for your brokerage.

Moreover, in the case of PMA, we are channel agnostic. This means if the client you referred goes straight to PMA for a new loan, if that loan settles, PMA will still pay you a referrer’s fee.

If you are a broker and you would like to know more about the referral program or our commercial finance products, feel free to contact us.

If you already have a client you’d like to refer and you wish to discuss a scenario with us, you may complete our Quick App form here (< 10 mins).