SME broker describes trends of 2020

The broker told The Adviser that approximately 70 per cent of the loan applications he writes are for commercial equipment, including cars for small businesses.

Mr Bahree said: “Some of the lenders, pre-COVID times, used to turn around an application on a ‘low doc basis’ within three to four hours. 

“The same application after COVID, in June, July and August would take about six to 10 days for the creditor.”

Additionally, Mr Bahree said clients were confused as to why their asset loans were – in some cases – taking longer than their home loan approvals.

“Some of my clients were saying, ‘Hey, I’ve gotten approved for a home loan in 10 days, are you saying to me that a car would take more than 10 days?’,” he said.

Moreover, due to increasingly stringent lending criteria from lenders brought about by COVID, otherwise “perfect” clients of Mr Bahree were being refused. 

He added: “Because of the changed lending landscape, everyone was very cautious. So, that was really hard to deal with...

“The lenders would change their policies and add more requirements for the documents needed for the assessment of the loan,” he said.

Mr Bahree suggested that the slew of administrative challenges, combined with a halt in importing goods due to COVID, such as cars, had created surges in private sale transactions, specifically for vehicle finance. 

“I think we have no stock within the country because a lot of ships were stuck in – we just weren't getting any stock.

“However, during all of this, what I did see coming up has been private sale transactions for vehicle finance, a lot of people are buying secondhand caravans and cars specifically.” 

Speaking on commercial financing, the Victoria-based broker said he has seen “a lot of construction equipment and truck business inquiries coming through”, but most notably, “courier businesses [that] bought vans”.

“If not for courier events, I think the numbers wouldn't have been that great last year. So, that was a clear winner,” Mr Bahree said.

Although “2020 overall, had been a very rocky road for asset finance brokers”, according to the SME broker, who said that his main concern throughout “this whole saga of COVID was just to keep close to [his] clients, rather than focus too much on the income”.

“What I’ve seen in the broker world in the last four or five years, [is that] you will only make as much money as the clients trust you,” he added.

“I think I was primarily focusing on still delivering on the expectation of the clients. If that meant if an application came to me and I couldn’t deliver it within the time frame because the client was in a hurry, I would gladly hand over the application,” he said.

“Because at the end of the day, they will still remember how this man, this broker didn’t go out just for money. He helped me out. So, that was my mindset throughout the whole process,” he explained.

Speaking on client’s needs, Mr Bahree said that he has reminders at least twice a year to give his clients call, to “find out how things are going with them”.

“I think being in front of them just being present throughout the term of the loan, and just being there as a support is one of the most important things a broker can do. And that’s what I’ve done,” he concluded.

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