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Lender

The rise of commercial lending

by 5 minute read
Brendan Wright

Many brokers understand there’s an opportunity to go beyond the mortgage and meet the business needs of their clients, but their biggest question is: ‘Where do I start?’

Getting engaged

At FAST, our partnership managers dedicate significant time with brokers in their business to understand their strategy. We work with them to develop and act on ways to meet the business and personal needs of their clients on a broader scale.

Anywhere between 10 to 30 per cent (at least) of mortgage brokers’ clients are self-employed, sole traders or small-to-medium business owners, so more than ever there’s a real opportunity right now for brokers to help existing and new clients beyond the home finance need to grow and expand their business.

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Distribution through the broker channel

I think it’s important to understand that commercial, asset finance and business lending broking has been going on for decades, so it’s not new. At FAST, we’ve been supporting brokers with these fundamental financial services in their business since we’ve been in existence – more than 15 years now.

But the reason why brokers are becoming more and more aware of the opportunity is because small business is the engine room of the Australian economy, and the trajectory we’ve seen in mortgages is absolutely playing out in the commercial and business lending space.

Why is that? Well, it’s the same reason why we have momentum in the mortgage space. With home lending you have consumers, investors and business owners looking for a finance specialist to provide them with help, guidance and advice, and now more than ever in this complex ambiguous world that we operate in, small-to-medium business owners are seeking out that same support for their business and personal needs, and are turning to brokers to get it.

Education and upskilling

There are a number of options for brokers who want to step into this space.

It can be complex – let’s not hide behind that fact – but there are also simple ways for brokers to get in now and meet those existing needs of their client base.

Aggregators have referral models where they can help that business be written and protect the client for the broker, but then there are capability programs as well. FAST has such a program and the major lenders in this space have them as well.

I think it’s about identifying where you want to go in your business as a finance broker. Start there and then talk with a trusted adviser to work out what the next steps are.

The biggest mistake is not doing anything about it, because if a broker does not meet these needs of their clients, someone else will. Right now, the percentage of commercial and business lending written through the third-party channel is playing out exactly the same way as it has done in mortgages.

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