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A panel discussed the current lending landscape and the concerns and opportunities for small and medium-sized enterprises over the next six to 12 months.
Due to the current economic volatility, the panel’s speakers discussed their concerns over what implications this might have on small and medium-sized enterprises (SMEs).
The overall sentiment among the panel (comprised of broker, lender, risk and macro-economic perspectives) was that although the outlook looks bleak for SMEs over the next six to 12 months, there are still opportunities for both borrowers and lenders to capitalise.
The reasoning behind this pessimistic outlook for the next year is a result of the ongoing trend and demand from SMEs for products involving cash flow, business loans, trade finance and concerns surrounding the availability and costs of labour, stock and materials.
When asked about the current outlook for the next six to 12 months, Skyward Finance director Max McFarlane stated that his view was “quite pessimistic”.
“I think there are issues around the property market and could affect equity positions if businesses are relying on that for funding their operations and growth,” Mr McFarlane said.
“I think that’s going to roll through on consumer spending and all the economic data I think is going to sour over the next six to 12 months to reflect a lot of that.”
Chief risk officer at Grow Finance Vlad Giliadov stated that the two main concerns clients and SME owners have had over the last 6 months are the availability and cost of labour, materials and stock.
On the contrary, Scott Mason, general manager commercial and property solutions at Equifax, stated: "I think the next 6 months is going to be really interesting, I think not as pessimistic as others, there’s money available, there’s businesses looking to grow, all the trends we’re seeing are pretty solid, but I am cautious."
Despite this outlook, there are opportunities for brokers to capitalise on the current economic environment and better help their clients in the process.
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"I’d like to think brokers, especially commercial finance brokers, has been getting more of a role as a trusted adviser.
"Often SMEs will go to their accountant as their go-to person but a commercial finance broker has a lot of skill and advice to impart to a business owner so I think the role has elevated for the commercial finance broker and I think that will continue to happen particularly because they can provide excellent advice," Mr McFarlane stated.
Co-CEO of Grow Finance David Verschoor offered some optimism from a lender perspective:
"I don’t think we’re going to get massive changes over the next 3 to 6 months, the interest rate markets have already factored into account the rate hikes that we’re going to see.
"Reasonably, I think it’s business as usual, we’re not seeing any demand drop as a result of high interest rates so it’s not like anybody is going to be able to wait and get a better price.
"I think the opportunity there is to go through the range of different products and actually see if there’s opportunities for clients to obtain what they need today and get that in place today," Mr Verschoor stated.
Mr McFarlane added that there's a lot of opportunities for brokers with more lenders in the market along with different products and education available for brokers and their clients.
Furthermore, Mr McFarlane offered some advice for brokers: "Staying close to customers and having in depth conversations is really important, helping them plan for the next year and stress testing that, whether it’s a growth scenario, flat scenario or a down scenario. Sometimes the best time to get capital is before you actually need it, so if you can plan ahead, its often much better to do that now."
SME lending growth
In a recent addition to The Adviser's Elite Broker series, MoneyQuest Balwyn broker Scott Seng sat down to talk about his process writing SME loans on the back of securing a record breaking $119 million settlement back in January of this year.
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