La Trobe Financial: commercial lending made easy

“We rely almost exclusively on mortgage brokers for our loan originations, therefore the broker’s user experience has rightly been the core focus of our product and process engineering over the years,” Mr Bannister explains.

“We pride ourselves on being able to cater for not only consumers who are under-served by the major banks, but also for brokers who may have been locked out of referring loan applications for non-residential products without first completing what are often onerous accreditation procedures and volume requirement hurdles.”

This has led to significant take-up by brokers recently as they heed warnings about the need to diversify to maintain a relevant finance business in the longer term.

“Our commercial loan portfolio has grown significantly over the past 12 months, largely as a result of first-time ‘commercial’ users,” says Mr Bannister. “These results are both encouraging and rewarding, knowing that not only are we achieving our objective of being easy to deal with, we are also assisting brokers with developing their businesses by educating them through the process, giving them skills that will expand their business.”

La Trobe Financial recently surveyed a range of brokers who were yet to submit a commercial loan application to discover what they thought prevented them from giving it a go. Here are the top three responses:

Top three perceived barriers to entry into commercial lending

1. Knowledge – The two most common responses were “I don’t know how” and “I don’t know where to start”

By far the most common misconception is that commercial lending is incredibly complex. Our view on this is that it doesn’t need to be. La Trobe Financial caters really well to new entrants to the commercial space since our products are designed to look and feel like standard residential transactions. We keep the process very simple so that if a broker can write a residential loan with us then they can write our commercial loans also.

Many lenders require brokers to be separately accredited in order to even lodge a commercial application, which depending on the volume of commercial business they write with that lender may simply not be worth the time and effort.

We recognise that this accreditation hurdle limits many brokers, and is why we do not require separate commercial accreditation.

2. Support – “I lack the assistance/training required to try”

One of the most crucial decisions a broker will make when thinking of lodging a transaction is which lender to use. Brokers should investigate a lender’s policy and processes for the specific transaction prior to lodging to avoid any unnecessary delays or surprises.

It is also important to partner with a lender that is willing to invest time with you to guide you through the process. Our credit analysts and sales team are keen to help brokers unfamiliar with commercial transactions, adopting an educative approach, and all are directly accessible for brokers.

3. Opportunity – “I don’t receive commercial loan applications”

Unfortunately, this is often because a broker simply doesn’t advertise or ask for this type of business. Like anything, if you don’t ask, you don’t get, and understandably if you’re not comfortable with these transactions you won’t go looking for them. The problem is, others are, and in order to future proof your business, brokers need to begin creating opportunities in this area.

Brokers already have the lead generation tools they need to make the transition to commercial lending – their CRMs. By reviewing a client’s Asset and Liabilities statement, brokers can identify opportunities to write commercial loans for existing clients, and this is a great starting point.

Cory Bannister is vice president, head of distribution, at La Trobe Financial