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SMEs: the key to unlocking commercial lending

Matt Bauld 6 minute read

There is no need to be intimidated by the idea of moving from residential into commercial lending. Instead, take baby steps by thinking about small-deal opportunities with SME clients, writes Prospa’s head of sales and business development, Matt Bauld.

As a residential broker, you’re sitting on the best business loan lead-generating tool there is – your current customer database. Many residential clients are likely to be SME owners, with 70 per cent of the Australian workforce employed in this sector.

Commercial lending has a place alongside your residential business as part of a diversified portfolio. Supplement those longer trails from residential lending with regular bonuses from small-business lending – these small deals are the low-hanging fruit that can deliver income to you now.

There are approximately 2.8 million small businesses in Australia, accounting for about half the value of the economy. Despite this important contribution, small businesses face a unique set of operational challenges, and one of biggest is access to finance, with traditional sources too challenging for most.

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Small-business owners are screaming out for help and advice around faster, simpler ways of funding their business without impinging on their personal needs, whether it be bridging receivables gaps, purchasing inventory, building a new website, hiring more staff, renovating or expanding, or purchasing equipment. That’s the opportunity, and it’s where the small-business loans are having an impact.

These types of small-business loan deals are now a realistic option for residential brokers, and the sector will continue to grow as more SMEs become aware of their financing options.

Prospa uses smart technology and an online application process to offer unsecured cash-flow loans of up to $250,000 on terms of three to 12 months, and focuses on the health of the business when assessing an application rather than the owner’s personal credit score or the family home as security.

Inexperience is no reason for brokers to avoid commercial lending. Prospa provides structured support in the form of a team of BDMs and state managers, so brokers can get in touch with any questions around the product, or even be mentored through their first experiences of commercial lending.

Education is a priority, and Prospa is committed to educating brokers on the unique circumstances facing small businesses and how cash-flow lending delivers genuine opportunities for growth. Prospa runs regular webinars, presents at broker get-togethers and provides template emails and a series of ‘How to Prospa’ fact sheets and flyers to help brokers get deals under their belt.

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Implementation is simple – once you spot an opportunity, call the team at Prospa to confirm your customer qualifies. You can choose to refer the customer directly, or Prospa will work through you. Either way, you are kept in the loop on all communication. Your commission is the same, and any successful deals are matched back to you.

Beau Bortoli, joint-CEO of Prospa, is confident that the biggest winners from cash-flow lending opportunities are small businesses in Australia, followed closely by residential brokers. Any residential broker who makes small-business lending a valued part of their portfolio will reap the benefits. It’s the same skill set you already have – the ability to really understand what is driving people – and that’s relevant, whether they are an individual or in their capacity as a small-business owner. It comes back to having confidence in that you have the right solution for your client.

SMEs: the key to unlocking commercial lending
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