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Commercial space not exempt from stricter credit policies

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Reporter 4 minute read

Tighter lending standards in the mortgage industry, imposed off the back of regulatory scrutiny, have been just as prevalent in the commercial space, according to one Queensland-based commercial broker.

Speaking to The Adviser, director of Green Finance Daniel Green said that credit tightening has not been limited to the residential lending space, noting that banks have also been cracking down on the commercial finance.  

“The banks have all tightened up on commercial lending, so loan terms have shortened,” he said.

“A lot of specialist lenders are looking for industry experience – so if someone’s going to buy a motel, they need to have some sort of experience in the hospitality industry or the accommodations industry.

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“Without the experience, it’s hard to get those deals approved, whereas if someone had some general business experience, and they presented well, you can get those deals approved.”

However, Mr Green said that tighter commercial lending standards have not affected his loan volumes.

“Demand is still really strong. I don’t think that’s dropped off at all. It’s just harder to get deals approved,” he said.

“It’s the credit side of things that’s more stringent, but as far as volumes go, my volumes haven’t dropped off at all. In fact, they’ve probably increased over the past 12 months.”

The Queensland-based broker added that he believes consumers are looking to brokers with credit expertise, claiming that trust in the banks is waning.

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“A lot of clients don’t trust the banks as much as they used to, and the banks don’t have those experienced bankers anymore who understand each of those industries.

“I think it’s a positive for brokers, [particularly those] who are experienced.” 

[Related: Growth of alt finance a  ‘huge opportunity’ for brokers]

Commercial space not exempt from stricter credit policies
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