Small commercial lending - The product and lender

As brokers look to broaden their revenue stream through writing other loan products, ING DIRECT has increased its interest in the commercial sector with a renewed focus on the lender’s Priority Commercial Mortgage offering.

The aim? To increase the offering’s exposure to the broker channel and to create a superior experience, both for broker and customer, during the process of securing a commercial loan.

NUTS AND BOLTS
ING DIRECT offers commercial lending products that including fixed and variable rate loans, as well as a commercial line of credit. The interest rates sit very competitively in the market, with products secured by non specialised real estate only.

The lender also offers a wide assortment of loans, from $250,000 to $2 million and considers higher loan amounts on a case-by-case basis.

Many small business owners already have a relationship with a broker based on residential home loans they have written, so there are clear opportunities for these brokers to target existing clients who might, for example, be renting a commercial property but are thinking of buying.

National partnerships manager at ING DIRECT, Sergio Delvescovo, says the lender’s products stand out from others on the market.

“One of the most popular features of our commercial offering is that it’s generally a ’set and forget’ type facility where it’s not mandatory to complete annual reviews for loans under $2 million that are performing well”.

This removes from commercial customers the burden of having to provide additional paperwork. It also offers certainty around interest rates for customers as with other lenders, annual reviews can typically result in the re-pricing of facilities.

ING DIRECT also offers a ‘Lease Doc’ product for loans of up to $2 million with an LVR of up to 60 per cent. “In this product, there are no tax returns or financials required – servicing is based purely on the rental return of the property,” Mr Delvescovo says.

Offered with standard commercial interest rates, the Lease Doc product is a simple and straightforward commercial loan.

Mr Delvescovo adds that ING DIRECT’s other Priority Commercial Mortgage products expand to 75 per cent LVR for principal and interest loans.

EASY AS PIE
While many brokers throw commercial loans in the ‘too hard’ basket, Mr Delvescovo believes ING DIRECT’s commercial offering is “simple”.

Although the loan itself can be more complex than its residential counterpart, ING DIRECT has created a programme in which the commercial loans process is analogous to writing a residential loan.

“We have aligned a lot of the documentation with our residential offering,” he says. “For example, we use the same application form that we use in residential loans and the same serviceability calculator.”

Liquidity Finance’s Danny Luu is one broker who is quick to sing the praises of ING DIRECT’s easy to use products: “ING DIRECT is one of the better ones when it comes to commercial loans,” Mr Luu says. “Their policies are very transparent and easy to understand – there are no blindsides that will knock you out midway through.”

John Swanson, chief executive officer of All Finance, agrees. “It’s reasonably priced, and it’s easy to deal with,” he says. “If you can do a residential loan then you can write this commercial paper”.

ING DIRECT has also made commercial lending very accessible to brokers. Any broker with residential accreditation has access to the lender’s commercial offering without the need for further accreditation.

“However,” adds Mr Delvescovo, “if they need further information or training on these products, ING DIRECT’s BDMs are out and about and readily available to educate brokers on our commercial products and processes.”

THE BORROWERS
ING DIRECT’s commercial products cover a wide range of borrower needs and types of security.

“We offer commercial lending to personal, company and trust borrowers,” Mr Delvescovo says. “It’s purely non-specialised real estate that we take as security so that includes factories and warehouses, flats, retail shops, commercial office suites, and childcare facilities.

“Our commercial offering is targeted at ‘smaller’ commercial lending, so loan amounts of up to $2 million seem to be the ‘sweet spot’ for customers and brokers. We will, however, consider applications for loan amounts greater than that.”

The Lease Doc commercial product, meanwhile, is targeted at commercial investors. “The individual or company doesn’t need to provide tax returns or further financials and their serviceability is based purely on the investment property’s rental returns”, says Mr Delvescovo.

“This is very popular amongst our commercial investor customers, and it’s seen to be our ‘niche’ in commercial lending.”