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Leading aggregators are seeking to educate their brokers about opportunities within commercial lending, as changes to residential lending practices emphasise the importance of business diversification.
Vow Financial held its first commercial lending conference last week in the NSW Hunter Valley, with brokers from across the country joining key lenders to discuss how brokers can integrate commercial loans into their existing service offering. Top commercial brokers from within the group’s network were also recognised with awards at the event.
“Commercial finance is an area that we’ve focused on growing and developing for a long time. To actually hold a conference that was specifically focused around commercial needs and requirements, demonstrates that Vow has grown significantly in size and scale,” the group’s CEO, Tim Brown, told The Adviser.
“APRA is trying to slow the residential lending market, in particular in regards to investment loans. That’s the bread and butter for most of our mortgage brokers today. We’ve always been big believers in the need for diversification, and have been encouraging our network to do so for some time. One natural transition for most residential brokers is to move into this space of financing and leasing/commercial.
“The transition to commercial can come naturally for residential brokers as they meet with people regularly with these needs. When talking to their residential clients, 30 to 40 per cent of them are generally self-employed and potentially have some sort of commercial loan.”
The event highlighted many of the key concerns brokers have about commercial lending, such as what constitutes the definition of a commercial loan.
“Many lenders will say if the loan is in a company’s name, then they would class that lending as a commercial security or commercial transaction. But then other lenders will say ‘well it depends on the security’. All lenders have different criteria and the lines become a bit blurred. I think it would assist everyone to have clearer definitions in place,” explains Glenn Mitchell, head of Vow Commercial and Leasing.
“So that’s why we have days like the Vow Financial Commercial Conference. It provides an opportunity to share knowledge and work out issues we all face, such as which lenders operate in the space and when they class the particular product or security as commercial or residential.
“I understand not every person will particularly want to diversify out of what they’re doing and what they’re doing quite well. However, in this day in age, clients want to get more and more of their solutions in one place. It’s critical for client retention that they look at the options available to them.”
It comes just a week after AFG held its fourth annual Commercial and Equipment Finance Conference in Melbourne, which this year included the launch of its Commercial and Equipment Finance Member Awards.
“The conference aimed to equip brokers with invaluable insights, great tools and the right networks to increase their business performance,” said AFG general manager of sales and operations Mark Hewitt.
[Related: AFG grows lending options for brokers]
