Will 2019 be the year of private lending?

Private lending in 2019With the release of Commissioner Hayne’s report  it’s clear that 2019 is going to bring about a number of changes to the private lending industry for lenders, brokers and borrowers alike. We take a look at how we see 2019 panning out for the private lending market.

A move towards transparency

The royal commission has destroyed borrowers’ trust in the big four banks, and now they’re looking for alternatives that offer honesty and transparency. This is an opportunity for those lenders with straight-forward and open lending processes to put their best foot forward and show borrowers that there is a genuine alternative to the mainstream banks.

Continued tightening of the purse strings

2018 saw the banks reducing their risk appetite and placing a number of restrictions on what they will lend and who to. This meant that obtaining finance became increasingly difficult for borrowers, particularly commercial borrowers. This restricted lending environment looks to continue throughout 2019, with the findings of the Hayne report recommending further regulations for the banks’ lending systems.

However, this has created a real opportunity for non-bank lenders who look at lending situations in a different light to the banks. Private lenders are able to be more flexible in who they will lend to. Rather than just look at the serviceability of the loan, they will look at the bigger picture when making a lending decision. This means that while the purse strings are tightening at the banks, more opportunities to access funding will become available through the non-bank sector.

Rise of commercial brokers

Borrowers seeking alternative lenders with transparent and flexible lending processes are going to need help. In these uncertain times, borrowers will increasingly look to brokers for guidance and advice. This is particularly the case for business borrowers who are most likely to be turned away by the banks. For this reason, it makes sense that a number of residential brokers will consider diversifying into the commercial space in order to assist this growing group of borrowers.

The year of private lending?

Overall, the changes in the lending landscape will shine a spotlight on the advantages of working with a private lender. Whether a borrower has become disillusioned with their big four bank or has had their loan application rejected, 2019 will see more and more people looking for an alternative solution for their finance needs. Private lenders have always been able to offer something different to the banks, however this year looks to be the time when the benefits of a non-bank lender really become known throughout the industry.

Benefits of working with a broker to access commercial funding

The benefits of working with a brokerIn this guest post, PMA referrer Gus Gilkeson, Managing Director of Grow Capital, writes about the benefits of working with a broker for small-to-medium businesses when trying to access commercial funding.

Obtaining funding for your small-to-medium business can be hard work. It takes a ton of time to do all that research, analyse your business needs, find a respectable lender, negotiate a deal you can live with, understand the terms of your financing, etc. That’s why working with a broker can be a really great idea. Brokers match up business owners and business lenders so that you can get the best outcome for your business. A broker could save you time, energy, and money, if you consider the costs of searching on your own.

Top 5 benefits of working with a broker:

Here’s five reasons you should consider working with a broker to access funding for your business:

1. Get the best rate. Brokers will work with lots of different lenders so that they can find the best rate possible for your financing.

2. Get the best solution. Sometimes it’s not just about getting the cheapest rate. A good broker will understand that getting the right solution is most important. For example, a short-term loan might be the best option. Your broker can help you look at alternatives to the banks that can offer specialised short-term finance.

3. Don’t sweat the details. This goes hand-in-hand with not wasting your time and effort. The point is that you can focus on running your business while your broker works on funding it. The nitty gritty? Let the professionals handle it.

4. They’re experienced. The best brokers have relationships with an extensive network of lenders and getting good deals is often all about having the right contacts. Plus, they’ll be able to tell quality deals from highway robbery — they’ll have seen it all before.

5. They’re knowledgeable. The finance world can be a confusing place with all the jargon and acronyms. However, a good broker would be in the know and could explain all the complicated terms and help you to navigate through the borrowing process.

Gus Gilkeson - Grow Capital

 

Gus Gilkeson is the Managing Director of Grow Capital where he helps Australian business owners, investors, and individuals harness their capital growth opportunities through funding.