The principal of a leading aggregator has said that brokers “need to look at specialist lending” to help their clients and take advantage of burgeoning demand.
Speaking to The Adviser, Mark Haron, principal of Connective, said that the aggregator was “seeing an increase in specialist lending across the board”, which he attributed to two main reasons: “Specialist lenders have really improved their capabilities in terms of the type of lending they can do, but the other thing is that a lot of brokers are now understanding that specialist lending is actually an important part of the business. It's become a little bit more mainstream, particularly as the banks have tightened up their credit policies and criteria.
“That means that more and more brokers are having to turn to specialist lenders for loans that have slight variances to them.”
Mr Haron added: “I think more brokers need to look at adding specialist lending to their repertoire. It doesn't mean that they need to become a specialist-only broker, but they'd be able to convert more of their business [which] is really, really important, in terms of helping clients.”
Indeed, Royden D'Vaz, national head of sales and distribution at the Bluestone Group, has said that the specialist lending market has been growing over the last few years, with the group particularly seeing “the self employed and credit impaired” coming through its doors.
Mr D’Vaz told The Adviser: “SMEs and the self-employed, especially the sole operators and the smaller businesses, is where the growth will come from [in future]. More and more of these people are looking for solution, whether it be a cash injection into the business to grow and develop it, or ongoing capital expenditure.”
Connective’s director agrees with Mr D’Vaz in thinking that this is a burgeoning market. He says: “I think what we're going to see a little bit more of in the future is more brokers and lenders coming into that SME market in terms of more cash flow funding. Those needing smaller loans, not requiring bricks and mortar security.
“I think it's a great opportunity for brokers to tap into that market, because quite often, the small business owners may not have enough equity on their property or haven't managed to get a property to start with, so I think we'll see a continued growth in unsecured business lending.”
Mr D’Vaz added that although “brokers tend to think it's harder” writing specialist loans, “it's just the same as writing a mainstream loan”.
He concluded: “I think more and more self-employed borrowers will come to non-banks and specialist lenders because they know that they're probably offering more solutions for them. It's just a matter of brokers embracing that.”
Find out more about accessing new revenue streams, such as commercial lending, at The Adviser's New Revenue Streams bootcamp in Sydney on 18 October.
[Related: Aged care loans tipped to become mainstream]
The major brokerage has reported a record increase in home loan p...
The social media giant has commenced processing applications for ...
Purple Circle Financial Services has reported a record increase i...