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For brokers looking to diversify into commercial lending it’s important to partner with a lender that understands the needs of small business
THERE’S A lot for brokers to love about commercial lending.
It adds a layer of diversity to a growing business, and research by OnDeck shows that as many as one in four of a broker’s home loan customers can be small-business owners.
It makes commercial lending an opportunity to provide a holistic service – and generate referrals to a new and broader client set.
The challenge facing brokers wanting to satisfy the needs of business clients is that small-business lending is traditionally a much-neglected area across the big banks.
However, with 2.4 small businesses operating across Australia , commercial lending can offer a rich vein of revenue opportunities – especially to brokers who partner with a lender that satisfies the needs of small enterprises.
Understanding the needs of small-business clients
So what do small businesses look for in commercial finance?
A key criteria is speed.
Small businesses simply don’t have the luxury of time to fill out lengthy loan application forms, then wait days – often weeks, for a funding decision, often to find their application has been rejected.
Cameron Poolman, chief executive of online small-business lender OnDeck Australia explains: “Small businesses typically require finance urgently in order to take advantage of time-specific discounts on inventory, or to fund new equipment or refurbish premises.
“These needs demand a fast application process, and rapid responses backed by equally rapid handover of funding. No business can afford onerous application processes or protracted approval times.”
Harnessing technology to accelerate applications and funding
As a leading provider of small-business finance, OnDeck Australia has fast-tracked the loan application and approval process using smart technology.
OnDeck’s in-house-designed assessment software – KOALA (Key Online Australian Lending Algorithm) – analyses a small business’ bank statements and uses risk management technology to accelerate lending decisions, often without the need to involve an underwriter.
This delivers valuable benefits for both brokers and their small-business clients.
The application is quick and easy. Just six months of recent bank statements need to be uploaded to OnDeck via a secure online portal. And with the backing of KOALA, OnDeck is able to offer Lightning Loans, which are unsecured, for funds up to $150,000.
Mr Poolman explains: “Lightning Loans really do live up to their name. A broker’s small businesses clients can be approved for finance in as fast as one hour and have the funds they need in as fast as two hours.
“More complex loans up to $250,000 can be processed as quickly as one business day. This lets small business owners seize opportunities, and frees up brokers to focus on more complicated deals.”
Demand for small-business lending up 29%
Brokers can be assured that demand for small-business finance is surging – more so since the economy reopened following the start of the pandemic.
“Our application volumes across the business increased 29 per cent in the second half of 2022 compared to the first six months of 2021,” Mr Poolman says.
OnDeck was the subject of a management buyout (MBO) in late 2022, and it has put the small-business lender firmly in Australians hands – while also driving a significant increase in loan volumes.
“Following the MBO we saw a 43 per cent uplift in volume originations in the first half of 2022 compared to the same period in 2021,” explains Mr Poolman.
“A primary driver for this growth was the increase in our Lightning Loan capability, allowing businesses to access up to $150,000 in two hours with just six months of bank statements, up from $100,000 pre-MBO.”
The bottom line is that OnDeck is helping brokers deliver a better, faster service to their small-business clients, and as Mr Poolman points out, “This can be the key for brokers to build a stronger business of their own.”
“NO BUSINESS CAN AFFORD ONEROUS APPLICATION PROCESSES OR PROTRACTED APPROVAL TIMES”
Cameron Poolman
CEO
OnDeck
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