Why now’s the time to diversify into commercial

Q. Why is commercial lending a big opportunity?

RedZed’s focus is supporting the journey of self-employed clients, whether they’re seeking residential or commercial finance. Therefore, it’s important we have suitable commercial products, listen to market feedback, and continue to enhance our product suite.

If you’re a broker with self-employed clients, having the commercial string to your bow means you’ll likely become your clients’ go-to professional for all their finance needs and they’ll likely keep coming back as their business grows. Many investors are also looking at commercial property for stronger rental and capital return, giving brokers more opportunities to grow their commercial client base.

Q. What commercial loans have been in demand at RedZed?

Our entire commercial product range is seeing volume improvement. Typically, our commercial loans are used for purchases, refinances, debt consolidation, tax debt funding, or to access business equity. We can also assist self-employed clients who may have experienced a financial life event and been ostracised by major lenders.

The biggest shift we’ve seen is in our SMSF numbers. Our brokers have embraced this space due to our competitive pricing and fees.

We’re also highly active in short-term commercial loans – helping businesses with cash flow and stock, securing future development sites for developers and investors, refinancing and providing cashout on residual stock, and assisting with bridging requirements.

Q. How do RedZed’s commercial products provide flexibility?

We offer alt doc income verification options. A borrower’s self-certified declaration of income can be supported by accountant declarations, BAS, or business bank statements.

Our products are priced on a borrower’s risk profile, considering credit profile, income verification, loan-to-value ratio, and the location and nature of the security property.

Our credit criteria are very competitive – we now accept commercial vacant land as sole security. We have also reduced our commercial SMSF interest rates and the application fee for our entire standard commercial range.

We also offer a short-term property solutions loan product to help brokers navigate transactions outside standard funding models. This does not require a thorough review of a client’s income documents but rather a common-sense approach that considers strong client profiles, suitable equity and security positions, and tangible exit strategies. However, it must qualify as an unregulated loan.

Q. How does RedZed approach commercial SMSF?

We see ourselves as very competitive in commercial SMSF. We don’t necessarily require self-employed clients’ financial documents but rather review their contributions over the last 12 months. We look at recency to understand a client’s current position and our flexible servicing proposition means the majority of SMSF applications qualify within the SMSF fund.

However, we also cater for self-employed clients who don’t pay money into their super funds regularly by considering servicing on a proposed contribution basis and completing a servicing review outside of the SMSF. But the real kicker is we accept alt doc income verification for proposed additional member contributions from self-employed members.

A lot of lenders that previously played in the SMSF space are no longer active and have not passed on interest rate reductions. Our market research suggests a lot of SMSF clients have active loan accounts with rates in the double figures, representing a great opportunity for brokers to have refinancing conversations with these customers.

Q. What education resources and support does RedZed offer to commercial brokers?

Our Self-Employed Broker Academy (SEBA) includes a new course, ‘Introduction to Secured Short-term Commercial Lending’, as well as our existing SMSF lending course. We’re also bringing two new commercial BDMs onboard to provide greater support to brokers already working in this space as well as those looking to diversify.