Having featured in the Commercial Business Writers ranking last year, successful commercial broker Glen Barnes speaks to SME Adviser about what the market is looking like at the moment and the abundance of opportunities that exist for brokers in this space.
Tell me a little bit about your background in the broking industry and how you got into commercial lending.
I've been in the broking field since 2006. I had a long and successful career with a major Australian bank in business and corporate banking for about 20 years, and then the opportunity arose for me to join some fellow bankers in a commercial brokerage.
I worked my way up out of high school to that senior commercial banking role, and I'd been in that commercial role prior to taking up broking for about five years. So, I was well-positioned and experienced to take on that commercial broking challenge.
What sort of commercial lending do you do?
I do all types: commercial property finance, development and project finance, mezzanine finance and all aspects of asset finance.
You've been working in this space since 2006 – over that time, how have you seen this space develop?
Credit policy changes regularly in line with the economy. Prior to the GFC, banks had a much more liberal approach, but since the GFC, credit has tightened its parameters.
With lending now, the deal needs to have the right sort of attributes that make the banks want to lend money for it, so it's got to be a good deal.
The rules as such haven't changed, it's just policy changes and it gets tighter, it gets looser... it just depends on the economic cycle that we're in. But at present, it’s much tougher, and also lead times are significantly longer with getting a response.
Especially in the development space, the market is significantly tighter. Banks have increased their benchmarks on what they require from an applicant.
With regards to investment funding or commercial lending, there are still good deals around where banks will take a position, especially on an owner-occupied type building purchase, where they may give a loan that's outside normal parameters, but every deal is different.
How do you navigate the challenges that arise from a tougher market?
I would be meeting with lenders regularly to keep across changes. You need to be across everyone, because what one party or one bank may not be doing, another bank may be doing.
You've got two customers. One is the client, which is the person requesting your assistance, and the other customer is the financial institution, so you need to keep both on board and you need to be across what their appetite is and what their policy changes are. I'd be having a regular contact with those banks and financiers. Also, speak to other brokers who specialise in the space, and I think you'll find that a lot of brokers are pretty good with regards to sharing information on successes that they've had.
What do you enjoy most about working in this space?
Although it's very long hours, I do enjoy being my own boss. I enjoy the strong relationships I develop with other brokers and financiers. I enjoy seeing customers be successful, and being a small part of that success. I like to celebrate success. It's a feel-good moment when you can say that you really contributed to an outcome that was a success, and you almost become a trusted adviser to these people when you do have success over and over again. It builds your own self-esteem and gives you confidence to try things that are even more difficult.
For other brokers who might be looking to get into this space, what are your top tips on how to succeed?
Build rapport with the client you're dealing with, with the lender you're going to place a deal with and with trusted advisers, i.e.: their accountant.
I find that a lot of the deals that I get are from existing clients who refer me, so I think customer service is key. I think regular updates are important as well as setting expectations early on.
Be willing to go that extra mile. For example, on my Easter break I flew interstate and then drove to look at a property. I give 110 per cent to my clients, and that's why I've been successful, by going above and beyond.
So, be flexible, be hungry to do that while you're getting established.