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The major bank has announced a new broker-specific funding line, which will provide up to 100 per cent of funding for those purchasing broker businesses.
National Australia Bank (NAB) has become the first major bank to offer the broker channel a finance product that provides brokers with up to 100 per cent of funding for the purchase of broker businesses and their goodwill.
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Funds are available for purposes such as acquisition and succession funding, partner payouts, refinancing, and working capital.
Similar to products offered by non-banks specialising in the trail book space, the Finance for Brokers product, designed specifically for brokers, is secured against the value of the business's balance sheets.
NAB will require brokers to offer directors’ guarantees, and a tripartite agreement with their aggregator to provide finance, including up to 100 per cent of the purchase price of broker businesses and their goodwill.
Anita Hyde, NAB's head of specialised and private, explained that up until now it has been challenging for brokers to seek bank finance to expand their own businesses, with lenders often requiring brokers to offer their family home or an investment property as security.
“[W]e understand the critical role that brokers play in helping to facilitate the dreams of Australians, whether they’re looking to buy a home or grow their business,” Ms Hyde said.
“Finance for Brokers is the next step in our commitment to the broking community, giving brokers access to the finance they need to invest in technology, processes, and compliance systems to grow and thrive — without having to leverage their personal assets.”
As the majority of borrowers chose to engage with mortgage brokers, with the Mortgage & Finance Association of Australia (MFAA) reporting 70 per cent of all new residential home loans were written by mortgage brokers, the major bank has said it wants to help brokers "secure funding for expansion".
NAB specialised business banking executive, professional services, Sara Zahedi, commented: “Like lawyers, accountants, financial planners, and real estate agents, brokers play an important role in supporting Australians through the most significant financial decisions of their lives...
"Close to 70 per cent of home lending customers choose to engage the services of a broker, while business lending is growing at the fastest rates since the GFC, elevating the importance of commercial brokers in helping businesses to secure funding for expansion," Ms Zahedi said.
“Just like other professionals, brokers have unique needs when seeking finance.”
Ms Zahedi said the initiative is a whole-of-NAB proposition that recognises the maturity and professionalism of the mortgage broking sector.
[Related: 70 per cent of mortgage go through a broker: MFAA]
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