Karen Carter, head of BOQ Commercial Broker, discusses how BOQ is responding to emerging market trends and investing in SME lending to make it easier for brokers and their customers to do business.
When did BOQ start working with the broker channel and why?
BOQ Commercial Broker was launched in October 2018 to work across both BOQ Business and Specialist audiences. It was a natural progression that a third-party channel be built to partner with like-minded brokers with specialised business clients.
Since then, our dedicated team of business development and relationship managers has been working with our brokers to provide tailored banking solutions for their customers. We’ve never tried to be “everything to everybody”, but instead have focused on working with brokers in metro and major regional hubs across the niche sectors that BOQ has proven capability and expertise in, including SME, healthcare and accounting, property, agriculture, hospitality and trading businesses.
What trends are you seeing in commercial financing for the SME sector?
The broker market is buoyant and overall conditions for small business are good, but there are discrepancies between sectors and across borders, largely due to the impact of COVID-19 lockdowns, particularly in NSW and Victoria. Although some sectors like hospitality, accommodation, wholesale and smaller retailers have been hard-hit, we’ve seen others performing strongly. Businesses connected to mining, manufacturing and infrastructure tend to be doing well. Property is performing strongly on account of low interest rates, but we expect some moderation in price growth over the next 18 months to two years. Perhaps, the healthcare sector has experienced growth buoyed by an ageing population and relative immunity to the pandemic. And agribusiness is bouncing back from the impact of drought due to favourable market conditions.
Credit growth for SMEs has been broadly flat for the past three to four years. In particular, over the past year COVID-19 has forced businesses to look for ways to adapt – with some running down their cash flow and relying on government support to stay afloat. With domestic demand likely to drive success for SMEs, many small business owners are looking to invest in their future, which is good news for the broker community – but it’s also highlighting the importance of taking the time to really understand the customer’s business.
Why should brokers consider partnering with BOQ?
At BOQ Commercial Broker we appreciate that building genuine long-term relationships is vital to the broker market. We’ve focused on providing clients with two points of contact who have small portfolios. Whether it is a deal for $100,000 or $150 million, brokers are supported by a dedicated relationship manager and business development manager with specialist industry expertise and knowledge of your sector.
To ensure that brokers are our priority, we are focused on:
- Turning deals around quickly and making it easy for brokers to deal with us
- Growing our market share with specialist broker deals and lending options for SMEs
- Continuing to deepen our relationships by improving the experience for brokers
In the past year, BOQ has made it easier for brokers to work with you. Can you highlight what those changes have been?
BOQ Business has been an industry leader of policy changes to help SME businesses1 improve their cash flow with less cash needed upfront. For commercial loans of up to $3 million, we have:
- Extended our loan terms for commercial security to 30 years and changed our maximum LVR to 85 per cent
- Extended our residentially-backed security terms to 30 years and maximum LVR to 90 per cent
- Increased our maximum interest-only term to 10 years
- Implemented development policy changes for construction projects with six units or less.
What are your top tips for fast approval of BOQ commercial loans?
Assuming we receive the information we need, our turnaround time is three to five days for SME commercial loans – a consistent time to yes. The key to a positive outcome is quality handovers and a real understanding of the customer upfront.
You are launching the new BOQ Commercial Broker portal. How will this help brokers?
The pandemic has fast-tracked the digitisation of previously manual processes, which is good news from an efficiency point of view. Launching this month, our new broker portal will enable brokers to access online pricing, accreditation, warehousing of applications, service calculators, industry insights and marketing. Within two to three years, it will become an end-to-end solution for the application process.
What lending offers do you currently have available?
For a limited time, we’re offering a valuation fee rebate of up to $2,000, on Business Term Loan, Commercial Rate Loan and Business Overdraft applications received between 1 September 2021 to 30 November 2021 (inclusive) and that fund by 31 January 2022.2 Offer excludes SME Recovery Loans (refer to below for further details).
We’re also providing better access to finance for eligible SMEs adversely economically affected by the March floods in 2021 and the Coronavirus pandemic3, as part of the federal government’s SME Recovery Loan Scheme. This includes:
- Variable Business Term Loans with a 10-year interest-only option and LVRs up to 85 per cent. Up to 100 per cent LVR will be considered where the customer has an owner-occupied home loan with BOQ4
- Reduced documentation requirements for eligible Lease Doc Loans up to 70 per cent LVR4
- Optional repayment holiday for the first 12 months5
- No application or monthly loan service fees.
Loans must be approved and loan documentation signed (including Borrower Declaration) and returned to BOQ by 31 December 2021.
If a broker would like to hear more detail and eligibility criteria on these offers, reach out to the team or visit www.boq.com.au/commercialbroker.
1 Small and medium business, security type and loan purpose eligibility criteria apply (“SME eligibility criteria”). A maximum loan-to-value ratio (LVR) of 85 per cent and the 10-year interest-only option apply to owner-occupied commercial security, otherwise the maximum LVR is 80 per cent and the maximum interest-only period is five years. Where the SME eligibility criteria are not met the maximum loan-to-value ratio is 70 per cent (non-residential and mixed security) or 80 per cent (residential security), and the maximum loan term is 15 years (non-residential and mixed security) or 25 years (residential security). Applies to the Business Term Loan product only. 2 The valuation fee rebate of up to $2,000 is available for Business Term Loan, Commercial Rate Loan and Business Overdraft applications received between 1 September 2021 to 30 November 2021 (inclusive) and that fund by 31 January 2022. The application must have a minimum new borrowing of $200,000 and maximum customer group borrowing of $5,000,000. The rebate will be paid to the applicant’s BOQ account from which the fee was originally paid or to another BOQ account held in the same name as the applicant if the fee was originally paid from another account not held at BOQ. The rebate will be paid within 30 days of funding. Applicants should seek their own tax advice in relation to the receipt of the rebate. Offer excludes SME Recovery Loans. Products and services offered by BOQ Business and BOQ Specialist are issued by Bank of Queensland Limited ABN 32 009 656 740 AFSL and Australian Credit Licence no. 244616. BOQ lending criteria, T&Cs and fees apply. Full terms and conditions available at any BOQ branch or by contacting your BOQ Business or Specialist relationship manager. BOQ retains the right to accredit brokers at its absolute discretion. Acceptance of any application for credit is always at BOQ’s lending discretion, and this document is not to be relied upon or represented as BOQ’s current lending policy. Content intended for broker use only and should not be distributed to customers or third parties. Please refer to the terms and conditions and target market determinations available at www.boq.com.au/important-information/tmd. 3 SME Recovery Loan interest rate and fee offers are only available on new lending up to $5 million per eligible ABN holder where the customer, loan purpose and security meet the SME Recovery Loan Scheme rules dated 16 September 2021 and BOQ credit criteria. These offers are not available for residential security, self-managed super fund or to extend or increase any existing non-scheme lending. All signed loan documentation must be returned to BOQ by 31 December 2021. Your actual interest rate may vary depending on the size of your loan, security being offered and full credit assessment of your application for finance. A margin may also apply. These interest rate offers cannot be taken in conjunction with or in addition to any other packages, negotiated interest rates or special offers. 4 Small and medium business, security type and loan purpose eligibility criteria apply (“SME eligibility criteria”). A maximum loan-to-value ratio (LVR) of 85 per cent applies for owner-occupied commercial security, otherwise the maximum LVR is 80 per cent. Higher LVRs up to 100 per cent will be considered on a case-by-case basis where the customer also has an owner-occupied home loan with BOQ. Ten years interest-only is available up to the maximum LVR criteria. If the LVR is higher than the maximum at the time of funding the portion of debt in excess of the maximum must be set up as a separate loan on a principal-and-interest arrangement amortising down to zero at the end of the loan term. If you meet our “Lease Doc” criteria the maximum interest-only term will be the lesser of 10 years or the remaining lease term minus one year. Where the remaining lease term minus one year is five to nine years the maximum IO term will be five years. 5 Repayment holiday of 12 months is where the interest is capitalised over the repayment holiday period. Interest capitalisation is the addition of unpaid interest to the outstanding loan balance. The outstanding loan balance will increase when payments are postponed during periods of deferment and where unpaid interest is capitalised.