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The commercial finance market can be very lucrative for brokers willing to do the work, but how can brokers get into this space?
The commercial market presents a great opportunity for brokers to expand their business’ revenue streams and offer a more complete service to their clients. But while it’s not entirely dissimilar to residential finance, there are a few things brokers need to know before they jump in.
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Commercial lending can be a little more complex than residential lending and there can often be a bit of a learning curve when brokers first move into the space.
“Commercial lending involves a greater level of assessment and understanding of risk,” says Cosi De Angelis, general manager of commercial origination at ANZ. “But with some initial support, we are finding that brokers pick up commercial lending very quickly,” he adds.
Those looking for commercial finance aren’t usually your typical mum and dad clients, and this means they want to interact with brokers in a different way.
Most commercial clients will be small business owners looking to purchase commercial property, or affluent investors looking to diversify their investment asset base.
As such, the conversation between broker and client can be a little more complex than the same conversation in the residential space.
But while moving into commercial finance may seem like a big stretch, there are ways brokers can transition fairly easily.
Mr De Angelis says ANZ is working hard to help its accredited residential brokers transition into the commercial space. To do so, he says, ANZ offers different levels of accreditation to brokers as a stepping stone into the commercial field.
“We can set up a broker on a simple ‘spot and refer’ program or provide the training for a full commercial accreditation,” says Mr De Angelis.
“Our aim is to support brokers to handle as little or as much of the application as they wish to. To build strong commercial lending skills, we also provide brokers with a free MFAA-accredited ANZ training program that carries CPD points,” he says.
Cathy Dimarchos, general manager of Sintex, who specialises in commercial lending, says she recommends brokers look for help from someone more experienced in commercial finance when breaking into the space.
“You can certainly look at perhaps getting under the wings of another broker or with a funder when looking at what type of scenarios might arise and the right questions to ask,” she says.
Commercial rewards
The more complex environment may mean some hard work for brokers initially, but it does have its benefits. Commercial finance allows a broker to offer their self-employed clients a full-service finance experience, improving client relationships and generating more business.
“The more you can offer a client, the more they will actually come back to you and the more they will refer other business to you,” says Ms Dimarchos.
In addition, commercial finance tends to be remunerated very well with fee for service an industry norm, according to Ms Dimarchos. She says commercial clients are usually more willing to pay a fee than residential clients because of their own business background.
“They’re usually a business person, so you’re dealing with a slightly different consumer…these customers are prepared to pay to have somebody do the running around and find the right deal for them,” she says.
For a residential broker not used to charging a fee this may seem a little daunting, but Ms Dimarchos says it’s a lot easier than many may think.
“The trick is to be confident; you’re there to provide a service… Why are you questioning yourself in asking for a fee for the service that you are actually providing?” she says.
