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With manufacturing returning onshore in Australia, it opens doors for brokers to offer tech-based lending services to SME clients, the association head said.
Speaking ahead of the upcoming SME Broker Bootcamp 2022, Commercial and Asset Finance Brokers Association (CAFBA) president Matt Atkin urged brokers to keep abreast of developments in the manufacturing sector.
The federal government recently announced that it would rebuild manufacturing capacity in Australia with targeted support for businesses.
Minister for Industry and Science Ed Husic said the Albanese government is also working to establish the $15 billion National Reconstruction Fund to “diversify and transform Australia’s industry and economy”.
The fund will deliver targeted co-investments in independently assessed projects across seven priority areas: resources; agriculture, forestry and fisheries; transport; medical science; renewables and low-emission technologies; defence capability; and enabling capabilities.
In addition, Mr Husic said the government would invest $111.3 million through targeted grants to stimulate regional manufacturing.
Mr Atkin — who is also managing director of Atlas Broker — encouraged brokers to monitor government announcements of this nature that indicate a return of supply chains to Australia and remain close to referrals and buyers to identify opportunities.
“I think we’ve already started to see and will continue to see some manufacturing coming back on shore, which creates opportunity, if we pick the right industries,” Mr Atkin said.
“With that, it opens doors to a lot of technology-based lending because it’s about how we can do things more effectively and efficiently”.
As such, brokers need to be well versed with the types of equipment SMEs might require to provide access to timely funding, he added.
“You need to understand where it’s coming from, how it’s going to get here, and what the time lags are,” Mr Atkin said.
“You also need to know what the secondary market is for the equipment in order to help SMEs access funding for it. Most brokers do this well already, and always have. But lenders really want to see that it’s well thought out.”
At the SME Broker Bootcamp starting next week, Mr Atkin and a panel of speakers will unpack the trends that could shape SME lending in the next one to five years and how brokers could partake in their SME clients’ growth journey by staying ahead of the trends and remaining proactive and set their brokerage up for success in the future.
Mr Atkin observed that he has seen a few SME clients access government-backed funding for innovation (which ties in with the manufacturing sector), and as such, clients could access a combination of loans from banks or non-banks and government grants.
“Having the ability to understand what’s going on in both those spaces is going to be important for brokers,” he said.
A significant challenge facing SMEs is cash flow constraints, with Mr Atkin warning that a broker “cannot sit and expect the phone to ring anymore”.
He pushed brokers to have a holistic view of their SME clients and offer a broader array of solutions rather than focusing on just one funding source especially as demand for SME lending could wane over the next 12 months as the market becomes increasingly challenging.
These solutions could include cash flow lending solutions such as debtor or trade finance or overdrafts.
“You can’t get through on one solution, which I think we have for a long time anyway,” Mr Atkin said.
“It’s going to become ever more important for brokers to understand the market a lot and access different funding sources. You’re going to need to broaden your thinking to help SMEs as they come into patchier markets.
“In times of uncertainty amid rising inflation and interest rates and staffing issues, brokers need to become a partner of the business owner in the cashflow side of things, and take all that stress away from clients.”
To hear more from Matt Atkin about how the SME lending landscape will evolve in the near future and how you can be a part of your SME clients’ journey, come along to The Adviser’s SME Broker Bootcamp 2022.
The 2022 SME Broker Bootcamp will take place in the following locations:
- Thursday, 17 November: Waters Edge, Portside Wharf, Brisbane
- Tuesday, 22 November: Parkroyal, Parramatta, Sydney
- Thursday, 24 November: Crown Promenade, Southbank, Melbourne
Places are limited for this free conference so book your place now by registering here.
For more information about the conference, including agenda and speakers, click here.
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