Mortgage Professional Australia 20.05

MPAMAGAZINE.COM.AU ISSUE 20.05

WORKING TOGETHER FOR OUR SMES A bipartisan approach and partnering with brokers are key themes for NAB’s head of commercial broker TOP 10 COMMERCIAL BROKERS In a rollercoaster year, these brokers have worked hard to succeed

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COMMERCIAL LENDING GUIDE How mortgage brokers can diversify into assisting small businesses

CORONAVIRUS SUPPORT Are government packages enough to help SMEs through the crisis?

4/05/2020 10:56:22 AM

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Principal and Interest repayments, with no establishment fee or monthly loan service fees. Minimum package lending balance of $150,000².

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• Your customers can manage their home loan and banking needs 24/7 with our CommBank app and NetBank. With helpful insights and tools at their fingertips, they can stay up to date and informed.

Visit commbroker.com.au for more information and the latest updates

Things you should know: ¹Owner Occupied interest only loans are eligible if funded on or from 7 April 2020. Customers must refinance their home loan from another financial institution. New loans and top-ups are not included in the minimum refinance amount. Bridging loans and the refinancing of an existing Commonwealth Bank or Bankwest home loan are ineligible for this offer. ²An annual package fee, currently $395, applies. ³Age and loan eligibility requirements and other limitations and exclusions apply. Refer to the full terms and conditions in the Home Loan Compassionate Care Information Booklet available at commbank.com.au/compassionatecare.

Applications for finance are subject to the Bank’s normal credit approval. Approval criteria, fees, charges, terms and conditions apply. Commonwealth Bank of Australia ABN 48 123 123 124 Australian credit licence 234945.

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MAY 2020

CONNECT WITH US

CONTENTS

16

An obligation for mortgage brokers

04 Statistics

23 NAB and PLAN Australia look at a key part of the commercial space

A GUIDE TO COMMERCIAL LENDING

How brokers reach the customers they want

08 News analysis

SMEs need fast access to finance

10 Opinion

Improving education in commercial broking

A dive into the market of commercial mortgages

30 Debtor finance

27

Helping businesses that are facing cash flow problems

ASSET FINANCE

52 Creating success

FEATURES

Specialist Finance Group discusses asset and equipment finance

33 Unsecured business loans

A solution for borrowers who are less willing to provide security Shifting your mindset to triumph

54 Crisis support

Tips for supporting your customers and employees through COVID-19

PEOPLE 56 Other life

A broker with a love of footy

36 FEATURES

TOP COMMERCIAL BROKERS A list of the best commercial brokers and their take on their current market

ot d e.

06 Head to head

18 Commercial property

MPA talks to lenders, brokers and aggregators about the opportunities out there for mortgage brokers in different areas of commercial lending

12

SMEs show early concern over the pandemic

FEATURES

SPECIAL REPORT

As the broking and finance industries face an unprecedented challenge due to the COVID-19 crisis, the head of commercial broker at NAB gives MPA his perspectives

facebook.com/Mortgage ProfessionalAU

02 Editorial

SME LENDING

CHRIS THOMAS

twitter.com/MPA_Australia

UPFRONT

FEATURES

BIG INTERVIEW

Got a story or suggestion, or just want to find out some more information?

MPAMAGAZINE.COM.AU NOW ONLINE: Our daily newsletter. Keep on top of property market trends, business strategy, and what industry leaders have to say.

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4/05/2020 2:00:41 PM

UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au MAY 2020

A helping hand through change

A

s you will see from the Statistics pages in this issue of MPA, and also from your own observations as you go about your daily life – however that might look now – businesses across Australia are seeing dramatic changes in their revenue, or in many cases have closed their doors altogether, either temporarily or permanently.

It is a well-known and oft-repeated fact that SMEs account for a huge proportion of the Australian economy – and right now they are struggling.

At MPA we have talked a lot over the years about diversification and why it could be important for a broker’s business. But this is a particularly serendipitous time to be publishing our commercial issue, because now more than ever business owners and self-employed people need help from a trusted financial expert.

So, we focus over the following pages on the various aspects of commercial lending, speaking to lenders, aggregators and brokers about the current environment and opportunities for those entering the space.

EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalist Tom Goodwin

Global Head of Communications Adrijana Monevska

Contributors Chris Helder, Terry Moody, Jaquie Scammell

CORPORATE

Production Editor Roslyn Meredith

Chief Executive Officer Mike Shipley

ART & PRODUCTION

Chief Operating Officer George Walmsley

Designer Cess Rodriguez Traffic Coordinator Kristine Jamir

Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

tel: +612 8437 4784 rebecca.pike@keymedia.com

SUBSCRIPTION ENQUIRIES

tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES claire.tan@keymedia.com

Now more than ever, business owners and self-employed people need help from a trusted financial expert For some brokers, diversifying may not be what you want your business to focus on right now, and that’s OK. Mortgage borrowers, first home buyers and investors may all need your help at this time with various scenarios, and brokers are so far doing a great job of keeping their clients up to date and aware of changes as they come through.

This issue is also a chance to celebrate some great commercial brokers and talk to them about their business over the last 12 months of writing commercial loans, as well as how they are working through the challenges they are facing now. You’ll find our 2020 report on MPA’s Top 10 Commercial Brokers on page 42.

This is a time when we are all learning and adapting, and you will see that we have done things a little differently this year, as we have not been able to present the trophy to our top commercial broker. But by no means is their achievement any less celebrated.

Thanks to everyone who has contributed to this issue of MPA. Rebecca Pike, editor, MPA

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Key Media Regional head office Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Seoul

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL neil.sharma@kmimedia.ca T +1 416 644 8740

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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4/05/2020 11:02:32 AM

THE ENVIRONMENT IS CHANGING… Borg Financial and myself have had to adapt to this new work/life style.

Lock down has forced us all indoors. What a better time than now to utilise the SFGconnect CRM to its full potential.

VIDEO CONFERENCING, INTERVIEW MODE, FULL AUTOMATION AND MORE. THESE INTEGRATIONS HAVE HELPED MY BUSINESS EXPONENTIALLY TO OPERATE WITHIN A REMOTE AND ISOLATED ENVIRONMENT. The SFGconnect platform has made it quite easy to do this. With consistent updates and CRM support, operating has never been more efficient. With regards to scaling my business it is quite user friendly and allows for a very high level custom setup/operation specific to your needs. Regardless of the times we are in Borg Financial is finding new ways to innovate with SFGconnect technology.

Kind regards,

Christopher Borg Director, Borg Financial

1300 303 382 specialistfinancegroup.com.au Australian Credit Licence No. 387025

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4/05/2020 11:02:23 AM

UPFRONT

STATISTICS HOSPITALITY FEARS THE WORST

The impact of COVID-19

Anxiety and fear within the hospitality industry are understandably more prevalent as restaurants and pubs were forced to close towards the end of March. Fifty-one per cent of SME business owners in this sector reported being satisfied with the federal government’s handling of the crisis, but 47% were dissatisfied with the speed at which the initiatives and actions were announced and executed.

As spending drops and businesses close, one study looks at the early sentiment of small businesses THE EFFECT of COVID-19 on SMEs across Australia can be seen by just walking down the street. Shopfronts, restaurants, bars and pubs have closed their doors as social distancing measures force us to stay at home.

For many businesses, the threat was almost immediate. A study undertaken in the first week of April demonstrates the early impact of social distancing measures. Conducted

by ACA Research in partnership with TEG Insights, the study shows that two in three SMEs experienced a decline in revenue due to the coronavirus pandemic.

31%

One in four had already temporarily or permanently closed their operations, and 74% were worried about survival of their businesses.

ACA Research managing director James Organ says, “My expectations are that confidence will gradually return as the curve continues to flatten in Australia. However, the Government needs to do two things and do them well to support small business owners.

One, ensure the rollout of stimulus payments is managed effectively and delivered on time.

Two, quickly detail how and when they expect to wind back the lockdown measures.”

14%

36%

average drop in revenue reported by SMEs

of SMEs have spoken to their landlord about rent relief

of SMEs have reduced working hours

74%

of SME owners are worried about their health and wellbeing

Source: ACA Research and TEG Insights, COVID-19 SME Sentiment Tracker

HIGH CONCERN ABOUT BUSINESS SURVIVAL There are high levels of concern among SMEs about the survival of their businesses, with 74% reporting being concerned. Those who were ‘very concerned’ were mostly from NSW, particularly the larger SMEs. Very concerned

FEARS RISE WITH DECLINING REVENUE

High levels of concern among SME business decision-makers correlate directly with a significant decline in business revenue.

6%

What impact has the COVID-19 crisis had on your business revenue so far?

20%

33%

How concerned are you about the survival of your business due to COVID-19?

60%

17% 10% 13%

41%

Very concerned Quite concerned

Not that concerned

56%

17%

22% 9%

Not at all concerned

Source: ACA Research and TEG Insights, COVID-19 SME Sentiment Tracker

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20%

Decline in revenue of 30% or more

18% 4% 21%

49%

82%

Quite concerned

Not that concerned

Not at all concerned

Decline in revenue of less than 30%

No impact on revenue

Increase in revenue

Source: ACA Research and TEG Insights, COVID-19 SME Sentiment Tracker

www.mpamagazine.com.au

National NSW 04-05_Statistics_SUBBED.indd 4

83%

84%

VIC

88%

QLD

80%

SA

75%

WA

82%

TAS

77%

ACT

83%

NT

77%

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HOW CONCERNED ARE YOU ABOUT THE SURVIVAL OF YOUR BUSINESS DUE TO THE COVID-19 CRISIS? Very concerned

45%

Quite concerned

33%

43%

Not that concerned

Not at all concerned

27%

66% 21%

47%

21%

12%

40%

67%

57%

41% 33%

28% 6%

14%

4%

16% 5%

Hospitality

Construction

Production

Retail trade

29% 9% 7%

10%

Distribution

Services

15% 5% Healthcare and education

Source: ACA Research and TEG Insights, COVID-19 SME Sentiment Tracker

TWO THIRDS OF SMES LOSING REVENUE Around two thirds of SMEs reported a decline in revenue due to the COVID-19 outbreak. There has been an average decline in revenue of 31%, with 47% of businesses losing more than 30%..

Decline in revenue

28%

HOUSEHOLD EXPENSES ALSO A WORRY

8%

What impact has the COVID-19 crisis had on your business revenue so far?

No impact on revenue

65%

Increase in revenue Source: ACA Research COVID-19 SME Sentiment Tracker

Reduction in wages and termination of staff mean that personal and household expenses are a concern for many SME business decision-makers.

Sixty-seven per cent are concerned about their household expenses.

Very concerned

8% 29% 24%

How concerned are you about being able to pay your personal/household expenses?

38%

Quite concerned

Not that concerned

Not at all concerned

Source: ACA Research and TEG Insights, COVID-19 SME Sentiment Tracker

www.mpamagazine.com.au

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4/05/2020 11:04:35 AM

UPFRONT

HEAD TO HEAD

How do you target the customers you want?

Nailing a niche and knowing who they want to target is vital for these finance brokers

Junhao Sun Managing director AUSUN Finance

“I build my business based on providing a premium level of customer service and solution-based recommendations/advice.

I focus primarily on commercial clients as my clients and I aim to achieve the same primary goal – providing a financial solution for their specific needs. I assist many new Chinese immigrants (both residential and commercial) with their financial needs. As an immigrant myself, I understand the fears of coming into a new country, and I wish to pass on my experience and assist those who have come after me to make their lives more comfortable and easier. My business grows through word-of-mouth referrals after a successful transaction, as I’ve been able to help each and every specific client obtain a suitable finance facility to suit their need.”

Renee Tocco Managing director Loanezi

“Nailing a niche is a fundamental choice for a finance broker, considering the pace of change in the lender market. It allows you to be an expert in your space, to stay on top of the ever-changing credit matrixes for relevant products, and also to keep a closer eye on your competitor activity. Branding and content need to be created with the end client profile in mind, as this will allow you to appeal to the clients that suit the niche you are specialising in. Being authentic will always attract higher engagement, and for this reason it is good to find the niche that suits you and in turn the clients that will naturally gravitate towards you. There is nothing more powerful than word of mouth, and this happens when you nurture your clients, deliver on expectations and confidently ask for referrals!”

Rebecca Mansfield Commercial finance broker Loan Market

“To be successful at anything in life, you need to have a strong network of people you know, like and trust. I use LinkedIn to specifically target those who I want in my network; currently I am focused on building relationships with accountants. The reasons I focus on accountants are: one, establishing strong relationships with accountants allows me access to a variety of end customers who can benefit from my services; and two, I pride myself on making sure my clients have holistic advice to ensure their overall business goals are accounted for. This means making sure their accountant is on board with the recommended loan structures, therefore targeting accountants allows me to build credibility with a strong referral source and make sure my clients receive the best advice.”

FOCUSING ON CUSTOMERS DURING COVID-19 For Aaron Milburn, Pepper Money’s general manager mortgages and commercial lending, it’s crucial to stay focused on the people who have been most heavily affected by the current situation. After all, he says, it’s those individuals who make up the wider collective – and helping them one-on-one is a step in the process of helping everyone. “We understand that the impacts of COVID-19 have been significant, and it’s an extremely tough time for many people,” says Milburn. “We need to remember that behind every customer is a real family who could be impacted – and we are committed to helping them succeed, even in these difficult circumstances.”

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4/05/2020 11:10:09 AM

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4/05/2020 11:10:16 AM

UPFRONT

NEWS ANALYSIS

Fast finance crucial for SMEs While many businesses are fairly supportive of the government’s efforts to help them, there are concerns that the funds will not be accessible fast enough AS SMALL and medium-sized businesses feel the impact of restrictions implemented to tackle the coronavirus pandemic, measures have been put into place to help as many as possible survive the coming months.

The figures on MPA’s Statistics page (p4) reflect the sentiment of business owners in the first week of restrictions, and the figures for the second week show how their concern grew. According to the COVID-19 SME Sentiment Tracker published by ACA Research and TEG Insights, in the first week of restrictions 33% said they were concerned about the survival of their business, but in the second week this grew to 41%.

Naturally, the highest level of concern is among those in the hospitality and retail industries, where decreases in profit are the most prolific.

The concern is not unfounded; Australia is already seeing thousands of people lose jobs and many businesses close their doors permanently.

To combat this, the Australian government announced the Coronavirus SME Guarantee Scheme, which would give SMEs access to working capital to help them survive the impact of coronavirus.

Under the scheme, the government is supporting up to $40bn in lending to SMEs

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with a turnover of less than $50m, including sole traders and not-for-profit organisations, guaranteeing 50% of new loans issued by eligible lenders until 30 September 2020.

The loans through the scheme will be unsecured and have a maximum value of $250,000. This has seen some lenders offer new unsecured products or open up their credit appetite in this area.

Research by the small business lender following the announcement of the scheme showed that four in five businesses believed the banks would not be able to deliver the finance as quickly as they needed it. And interestingly, only one in

“We know that providing businesses with time to ride out this period of uncertainty is absolutely essential” Aris Allegos, Moula Cash is king: impact of the scheme Government help has been met with mostly positive feedback: the weekly sentiment tracker shows that, as at 10 April, 58% of SMEs were satisfied with the government stimulus package, including commercial rent relief and JobKeeper, up from 54% the week before.

However, when those who were dissatisfied were asked why, many commented that funds would not come through quickly enough.

The speed of access to funds is something Lend.com.au looked into in its own survey.

three believed non-banks would deliver loans faster than the banks.

But Lend CEO Bill Baker pointed out, “This is why the non-bank lenders have been popping up all over the place, because if you go to a bank to get an unsecured business loan, it takes a long time. A non-bank lender can do that pretty much within a couple of days, and as you can appreciate, cash is king for the SME.” Businesses need this finance quickly because they are currently in purgatory wondering whether they can keep on staff, pay invoices or

www.mpamagazine.com.au

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4/05/2020 5:22:05 PM

BUSINESS SATISFACTION How satisfied are you with the government’s stimulus package?

Extremely satisfied

54%

58%

16%

15%

38%

43%

Somewhat dissatisfied

31%

26%

Extremely dissatisfied

10%

11%

Somewhat satisfied Neutral

5% w/e 3 April

5% w/e 10 April

Source: ACA Research and TEG Insights, COVID-19 SME Sentiment Tracker

maintain their overhead costs. While 70% of business owners in Lend’s survey said they needed this cash to survive, 12% said the timing was already too late.

Baker raises further concerns about the

Ready to support Aussie businesses Along with the banks and non-banks joining in the scheme, a number of SME lender fintechs and customer-owned banks were appointed, opening up competition for them.

“The broker community will be crucial in helping us reach and support as many small businesses as possible” Beau Bertoli, Prospa scheme, such as loan approval bottlenecks and inconsistent credit criteria between lenders.

“Without knowing which lender’s criteria matches their credit profile, a business will go through the time-consuming process of making an application with one lender, waiting weeks in the queue for the result, and approach another if they are not approved,” he says.

“They will be forced to continue shopping around between lenders in an effort to secure much-needed funding.”

Aris Allegos, CEO of Moula – which was one of the first five non-banks to be selected – reiterated the importance of speed when it came to getting funding to SMEs, and said fintechs like Moula had the technology to approve loans within hours. He said that while the challenges facing businesses were unprece­ dented, Moula was “in this with them”.

“We know that providing businesses with time to ride out this period of uncertainty is absolutely essential,” Allegos said. “Speed of decisioning is critical to how Moula can serve

SMEs in this rapidly changing climate. Rather than relying on a cumbersome process that may take weeks, the use of accounting and bank transaction data enables Moula to provide an answer within 24 hours.”

Another fintech early to join the scheme was Prospa, and co-founder and chief revenue officer Beau Bertoli pointed out the importance of brokers to helping them reach borrowers.

“The broker community will be crucial in helping us reach and support as many small businesses as possible,” he says. “This funding could be a lifeline for their customers, and I encourage brokers to contact the Prospa team with their scenarios to see if we can help.

We’re here for small businesses and are set up to deliver a response and funding quickly.

“We also know that many brokers are small business owners too and recognise this is a tough period for most. We’re committed to supporting our partners and their customers in any way we can.”

Customer Owned Banking Association CEO Michael Lawrence added, “Our members stand by all their customers, and businesses are no exception. Dedicated banking staff are committed to helping customers overcome the challenges of this unexpected pandemic.”

www.mpamagazine.com.au

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4/05/2020 5:22:16 PM

UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com

Improving education in commercial broking While the royal commission found no underlying misconduct in commercial finance broking, it is incumbent on a self-regulating industry to maintain this high standard, writes Terry Moody WE ARE living in a very different world now, and the way we do things and the plans we have made have been turned upside down.

Nevertheless, our common hope (and goal) is for business to eventually return to normal.

But when this happens, will we be prepared?

Only last year, the royal commission into financial services caused many brokers to reassess their business models and the services they offer. It was very pleasing that the royal commission found no underlying problems in commercial finance broking, but we like to think this was no accident.

The Commercial and Asset Finance Brokers Association of Australia (CAFBA) has for many years set professional standards that its members must adhere to, including a minimum education requirement. The standards we uphold are comparable to the best interests duty, and we have applied them since their adoption in 2014. So, what is there to improve?

CAFBA’s research has shown that expanded educational offerings can attract a new generation of commercial financiers for whom a credential is a necessary first step. Gen Y and millennials are attracted to a profession that offers a credential and structured career path.

As we move to further professionalise the industry, our designated credentials demonstrate the education level and professionalism of the commercial finance sector. For a self-

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regulated industry, in the aftermath of the royal commission, the need for well-educated professionals has never been more important.

It is CAFBA’s goal to expand its professional education program, which will be used to attract new and more diverse industry entrants by offering credentials and a structured career path into and through the commercial and asset finance profession.

CAFBA has therefore developed, in conjunction with the Institute of Strategic Management, these accredited courses that are specific to commercial and asset finance: • Certificate IV in Financial Services (FNS41815): Specialising in Commercial and Asset Finance • Diploma of Financial Services (FNS51815): Complex Issues in Commercial Lending • An Australianised version of the US Certified Lease & Finance Professional (CLFP) course Education will be held up as proof of the industry’s ability to self-regulate commercial finance. The ultimate goal is to deliver the internationally recognised professional designation – the Certified Lease & Finance Professional – with post-nominals (CLFP).

Education will be the pathway to not only attracting a younger and more diverse

commercial financier into the industry but also demonstrating the ability to uphold professional standards.

After the royal commission, many residential mortgage brokers looked to diversify into commercial lending, and while this makes sense, it is important that they have the skills and necessary training to do so. Commercial finance is very different to consumer finance, and as the size of the transaction becomes larger, so does the complexity.

Commercial finance requires brokers to have the right education. While the royal commission found no evidence of failure in commercial finance or with commercial finance brokers, it is incumbent on our self-regulating industry to maintain this high standard. This includes ensuring that lenders and aggregators only accredit brokers who have the necessary qualifications to write commercial finance.

There is no profession that allows people to practise without the right qualifications, and our profession should be no different. Having the right skills will result in delivering the right solutions for Australian businesses.

The industry generally recognises that it needs to upskill, and lenders and aggregators contribute to this by organising workshops and masterclasses. While beneficial, these are only learning bites and do not encompass the entire curriculum that needs to be covered.

Only formal and structured education will do this. That is why CAFBA has recently formed an Education Council to oversee the structure and delivery of the right curriculum to train the next generation. The Education Council, of which I am chair, will include the lenders, aggregators and other industry bodies, ensuring that we have a coordinated approach to education in commercial finance.

While education might not seem a priority during this pandemic, things will eventually return to normal. We will then, more than ever, need the right people with the right skills to assist businesses in getting back on their feet and recommencing growth.

Terry Moody is a director of Moody Kiddell & Partners, as well as a CAFBA board member and chair of the association’s Education Council.

In Th o 2 El 3 A b 4 If p B ©A 1

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4/05/2020 11:13:17 AM

HELPING YOU AND YOUR CUSTOMERS GET BACK ON TOP OF THINGS If the pressures of COVID-19 have affected cash flow for your business customers, here are some financial support measures that may be available to them.

WE’VE DECREASED VARIABLE INTEREST RATES ON MANY OF OUR SMALL BUSINESS LOANS IN AUSTRALIA BY

0.25%

p.a.

ELIGIBLE CUSTOMERS CAN REQUEST A DEFERRAL ON TERM LOAN REPAYMENTS FOR UP TO

ELIGIBLE CUSTOMERS CAN REQUEST A TEMPORARY OVERDRAFT INCREASE FOR

6 MONTHS

12 MONTHS

WITH INTEREST CAPITALISED 1

We’re providing access to new, lower rate business loans that qualify under the Australian Government Coronavirus SME Guarantee scheme. Business customers may be eligible2 for: A THREE-YEAR BUSINESS LOAN OF UP TO

A 6 MONTH BUSINESS OVERDRAFT OF UP TO

$250,000

$250,000

WITH A 6 MONTH DEFERRAL ON REPAYMENTS (WITH INTEREST CAPITALISED 1)

WITH A 6 MONTH DEFERRAL OF INTEREST (WITH INTEREST CAPITALISED 1) 3

IF YOUR CUSTOMERS NEED TO DEFER THEIR BUSINESS TERM LOAN REPAYMENTS, WE’LL KEEP PAYING YOUR TRAIL COMMISSION 4

We’re here to help and ready to talk.

Please reach out to discuss the options which might be right for your customers.

Contact your ANZ Broker Manager or Banker

anz.com/covid-19

Interest capitalisation is the addition of unpaid interest to the outstanding loan balance.

The outstanding loan balance increases when payments are postponed during periods of deferment or forbearance and unpaid interest is capitalised.

2 Eligibility and credit criteria apply.

3 At the end of the 6 months, borrowers have the option of fully repaying the overdraft or rolling the balance into a term loan for up to 2.5 years.

4 If your customer defers their business term loan repayments under ANZ’s COVID-19 support package, ANZ will keep paying trail commission on that facility in accordance with the Commercial Broker Agreement. © Australia and New Zealand Banking Group Limited (ANZ) 2020 ABN 11 005 357 522.

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4/05/2020 11:13:31 AM

PEOPLE

BIG INTERVIEW

CHRIS THOMAS: SUPPORTING AUSTRALIA’S SMES Brokers are in a unique position right now to support their customers through the multiple challenges the coronavirus might throw at them, and they can do this with help from NAB

KNOWN AS Australia’s largest business bank, NAB is working hard to support the millions of small and medium-sized businesses across the country as they face the challenges brought about by the coronavirus pandemic. But now is the time for a bipartisan approach rather than for touting the merits of one bank over another, says Chris Thomas, general manager, commercial broking, at NAB. “This is the time to call out that every lender is doing a wonderful job in providing support packages to their customers,” Thomas says.

As the COVID-19 pandemic forced the government to put strict restrictions on the number of people allowed to gather in one place, the impact was immediately felt by many businesses, particularly in the hospitality, tourism and retail sectors.

This can already be seen in the number of applications businesses have made for

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support packages, which banks had to very quickly implement. NAB, for its part, is allowing repayment deferrals, extensions of loans, and reduced interest rates; by mid-April it had already received almost 30,000 applications.

Fighting for businesses Businesses are facing multiple challenges at the moment, whether they are temporarily closing their doors, letting staff go, or facing reduced business because their customers are losing their salaries. There is also a flip

“This is the time to call out that every lender is doing a wonderful job in providing support packages to their customers” “With the amount of people that are availing themselves of bank support packages or government support packages, you can see the immediate impact that evolves from a crisis which really hits the heartland of our SME community,” Thomas says.

“It’s very important to our country’s prosperity and future that we have a viable small business community.”

side in that many businesses will be seeing unprecedented demand but won’t have the funds to keep up with it.

Unfortunately, the reality is that some businesses will not survive these challenges, Thomas says. This will create significant pressure by increasing unemployment and impacting the broader community. But he believes there will be positives.

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4/05/2020 11:15:26 AM

PROFILE Name: Chris Thomas Company: NAB Title: General manager, commercial broking Years in the industry: 32 How are you supporting brokers?

“We have around 450 broker-aligned business bankers all extremely capable and experienced in looking after broker customers, and our equally experienced BDMs are there to assist our brokers.

We have dedicated credit support throughout our broker channel, and we have a large number of specialists through different aspects of the business banking landscape. We work closely with aggregators in respect to what more we could be doing given social distancing may be with us in some form for a while.”

www.mpamagazine.com.au

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4/05/2020 11:15:50 AM

PEOPLE

BIG INTERVIEW

“I think there are positives here, and that is the great resilience of Australian businesses and the Australian community more broadly to respond to challenges through fostering innovation,” he says. “We should not lose sight of that, because that’s our way out. We should continue to challenge current business models and current practices and find new and better ways of working together.”

NAB is also focusing on its partnership

has meant brokers are having to find new ways to build relationships with their customers.

While there is great value in being able to physically meet, Thomas says this experience is opening the eyes of everyone to what can be done digitally. Although he does not suggest digital meetings will now take over, he says there are things to learn.

“Getting past this, I can see where we will leverage these digital ways of doing things a lot

“Brokers will continue to play a very strong role as trusted advisers to customers, and we’re very proud to work with commercial brokers” with brokers in continuing to support customers and minimise as much of the impact on them as possible. Thomas says the role of the broker will be particularly important over the coming months, and NAB will be there to guide those brokers with its team of BDMs and broker-aligned business bankers.

He adds that, on top of the financial guidance commercial brokers provide, they can also offer genuine empathy and understanding at this time.

“It’s not lost on NAB that many of our commercial brokers are small businesses in their own right, so they will be facing a number of their own challenges. This does, however, place them in a position of genuine understanding of what others are going through,” he says.

“Brokers will continue to play a very strong role as trusted advisers to those customers, and we’re very proud to work with commercial brokers that are partnering with NAB. We’ll be stepping up and doing our bit in that partnership to help as many of their business customers through.”

Creating more impact No longer being able to offer face-to-face meetings due to social distancing measures

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more,” he explains. “We’ll still have physical interactions, but how do we make the physical more impactful? We will see emerge out of this a number of innovations that will change the face of business forever. I think that’s a real positive; it’s a silver lining in a dark cloud we should all look to.”

Many brokers may also see their businesses changing in terms of what they offer. Mortgage brokers may find that now is the time that they can help their clients beyond home loans, and other finance brokers may realise there is scope to widen their commercial offering.

Even ahead of this pandemic, MFAA figures were showing an increase in the number of mortgage brokers writing commercial loans.

While Thomas says he supports broking firms that want to invest in the commercial space, he believes they do need to be cautious before jumping into complex scenarios.

“I think any broker that has a deliberate strategy and the right commercial acumen to support businesses can play a significant role in the life of a business customer right here, right now,” he says.

“A deliberate strategy is so important because customers need really clear advice, they need understanding and they need empathy. In order to perform that vital role,

NAB ACTION ON COVID-19 As Australia’s largest SME lender, NAB has put in place a number of initiatives to support small and medium-sized enterprises struggling as a result of the impact of the coronavirus pandemic, including: • Deferring principal and interest for up to six months on a range of business loans, including floating and variable rates and equipment finance loans • Offering a 200bps rate cut on new loans and all overdrafts on QuickBiz, effective 30 March • Offering an additional 100bps reduction on variable rates for small business loans, effective 30 March – on top of a 25bps reduction earlier in March • Access to up to $65bn in additional secured limits to pre-assessed customers, with $7bn currently available for a fast assessment process • Access to up to $9bn in additional limits for unsecured lending for existing customers via QuickBiz • Deferral of business credit card repayments

you have to have the experience and expertise to support those customers.”

As brokers work to help the business community, Thomas says “we’ll all work together”.

“There are going to be some challenging times ahead, but we should look towards optimism and positivity and see a way through this,” he says.

“We can work through this together, and we’ll come out the other end a lot stronger for what we have all been through. We’ll need to work together to rebuild, and create a new normal in the economy, and I’m very confident that we can do that.”

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4/05/2020 11:15:57 AM

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE

TIME TO HELP SME CUSTOMERS After a period of increased activity and diversification, Australia's businesses have suddenly been hit hard by the COVID-19 pandemic. Mortgage brokers are in a prime position to help, as long as they are well prepared. In this Special Report we take a look at various areas of commercial lending to shed light on the challenges and opportunities

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OVER THE last 12 months, many finance brokers reported seeing banks and lenders open their appetites back up to commercial lending. Banks and new lenders were coming forward to service more SMEs and property developers. Now, with the current uncertainty, many are beginning to pull back again.

In September 2019, lending to businesses for construction reached its highest monthly figure since 2016, according to figures from the ABS, but by February this year it had fallen by 39%.

In contrast, business finance, including the purchase of plant and equipment, vehicles and other equipment, rose by a little over 5% year-on-year in February.

Figures also show that there are more mortgage brokers now writing commercial loans. The latest MFAA Industry Intelligence Service reports that after two consecutive periods of decline the number of brokers writing these loans has risen back up to the highest level yet.

According to the report, there were 3,670 mortgage brokers writing commercial loans, up by two brokers from the previous high, and an increase of 25% compared to the same period two years earlier.

With a somewhat challenging home loan market last year, this uptick shows that brokers have been looking to diversify their offering beyond residential solutions. As has been the case for the last few years, brokers in

NSW/ACT make up the majority of mortgage brokers now writing commercial loans, closely followed by those in Victoria, which had held the lead until 2016/17.

Perhaps reflecting the shift in lender sentiment towards business lending, the value of commercial loans settled by mortgage brokers grew in the six months to September 2019, reaching its second highest value after a decline in the previous six months.

It will be interesting to see in six months’ time what the next lot of figures shows us, as that once-positive sentiment has retreated due to the uncertainty of the coronavirus pandemic. Meanwhile, mortgage brokers should have more opportunities now to seek out and support business customers.

It is highly likely that many mortgage brokers already have customers that are self-employed business owners who need additional support even at the best of times – but now, as the Australian economy faces severe challenges, businesses have been forced to temporarily close their doors and customers have less money to spend. Over the following pages, MPA covers the opportunities that are there for brokers in areas that businesses and investors need help with.

Read on to find out exactly what you need to know about areas such as debtor finance, development finance and unsecured business lending.

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4/05/2020 12:26:31 PM

SPECIAL REPORT

COMMERCIAL LENDING GUIDE

COMMERCIAL PROPERTY COMMERCIAL FINANCE IN A CRISIS

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In the shadow of the COVID-19 pandemic, the commercial property market in Australia is undergoing transition. MPA talks to some of the leading names in the world of commercial finance to gain insights for the coming months

BOTH THE first and second quarters of 2020 have presented businesses around the world with considerable challenges.

Commercial property has been no exception. Although it’s somewhat better insulated than the retail or residential market, it would be disingenuous to pretend that COVID-19 hasn’t had an impact.

According to ABS figures, finance for commercial property had slumped slightly

CEO of Thinktank. “COVID-19 is exacting a heavy toll on our economy. It is our belief that the health and economic crises will peak in the June quarter, and while there will be a recovery in the September quarter it will be soft. It is not until the December quarter that the economy will start to pick up and return to positive growth, with shutdowns becoming a memory and unemployment levels receding.”

“We are used to discussing vacancy rates, yields, clearance rates, and things like cranes in the sky each month, but all that has suddenly changed” Jonathan Street, Thinktank in the second half of 2019, but this looked set to be on the way back up. While it is expected that COVID-19 will bring figures back down again, the full effect hasn’t yet been felt, and given the uncertainty that surrounds the situation, it’s fair to say that businesses are still wrestling with the full implications.

“We are used to discussing vacancy rates, yields, clearance rates and things like cranes in the sky each month, but all that has suddenly changed,” says Jonathan Street,

Mortgage brokers aren’t immune to these conditions by any means. Though some will be able to make it through the lean times on the basis of existing trail income, there have already been signs of residential property markets around Australia slipping.

Accordingly, there has been an increased interest in diversification and a shift towards the commercial market. Intended to help provide mortgage brokers with consistency during the various peaks and troughs of the lending market, diversification remains an

LENDER’S TAKE How do you think 2021 will look for commercial property?

“As a lender, we are doing all we can to support brokers so they can help more businesses and commercial investors. This is why we have recently incorporated digital identity verification and digital loan contracts into our application process. It’s also why we are proud to be a participating lender in the Australian Government’s SME Guarantee Scheme to further extend our support of small business finance.”

Q

John Mohnacheff, national sales manager, Liberty

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE attractive prospect for many of those who are looking to expand their palette.

“Up until COVID-19, the commercial property market experienced steady growth and caught the interest of savvy property investors,” says John Mohnacheff, national sales manager at Liberty.

“From office space and shopfronts to warehouses and factories, there are many reasons why customers may seek to finance a commercial property, and many opportunities for brokers to help. While things look very different right now, commercial borrowers still require the expert support of a broker who can help guide them through these uncertain times.”

Mohnacheff points to a “surge” in the number of consumers setting their sights on commercial property in recent years.

“As a largely underserviced segment of the market, brokers in this area have the advantage of being able to carve out a strong position in this large market,” says Mohnacheff.

“In the current climate, where the stock markets are in flux and reacting to world events, opportunities may emerge for astute commercial property investors.”

Other factors promoting diversification Angelo Manos, general manager commercial broker at ANZ, notes that there are other contributing factors beyond COVID-19 that could drive diversification.

“If we think back to over 12 months ago after the royal commission, fundamental changes were proposed from a mortgage broker perspective,” Manos says.

“As a result, we saw aggregators encour-

“With commercial property lending, it’s important to understand the profile of the lease, including who the underlying tenant is or may be” Angelo Manos, ANZ aging brokers to diversify their income base.

A natural extension from residential property is to provide customers with the ability to purchase commercial property. As brokers became confident and competent in commercial property, they further diversified into

LENDER’S TAKE What differences are there between residential and commercial property lending?

“There isn’t actually as much of a difference between self-employed residential lending and commercial lending up to about $1.5m, as some believe. The process is similar, and while the products, eligibility and serviceability might demonstrate differences, there are common underlying credit considerations and deal construction principles.

“A great place to start is with simpler, self-employed transactions supported by a helpful relationship lender and assistance from aggregators and other brokers. It becomes vital to deal with a trusted and experienced commercial property lender when the parties to the loan become numerous; working out servicing becomes complex; the loan size is in a higher range; or the nature of the security goes outside standard.”

Q

Jonathan Street, CEO, Thinktank

20

other commercial lending opportunities.”

Street explains that by diversifying into commercial a broker’s ability to provide customers with other forms of finance as needed is strengthened. They can also benefit greatly from affiliations across many lenders, allowing them to source the best lending solution and conditions.

“We have seen a constant trend of mortgage brokers heading into commercial property finance, which we believe will only

strengthen during this period of economic instability,” says Street.

“Diversification is a sound option for brokers to reduce the risk of concentrating on one particular income stream and mitigate the risk of the unknown.

“With the maturing of product distribution channels, a contemporary broker can occupy a very similar role to that of a traditional relationship manager in a major financial institution,” Street explains.

“It also provides them with a distinct advantage, as they’re not driven to cross-sell from a singular institutional platform and are essentially unlimited by way of product offerings, recommendations and eventual selection.”

Going the extra mile for borrowers Though there is obviously work involved in diversifying a portfolio, adapting an existing skill set to a new style of broking might not be as demanding as anticipated. The core qualities that make a good broker tend to be readily transferable.

“When it comes down to it, there are more similarities between residential and

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE commercial property lending than differences,” Mohnacheff says. “For brokers to succeed in either area, they require essentially the same skills: good customer service, sound product knowledge and a willingness to go the extra mile.”

Where the difference lies is in competition, he explains.

“In the residential broker space, customers are spoilt for choice,” says Mohnacheff. “On the other hand, brokers originate only a small percentage of all commercial property loans.

So they must ask themselves: why limit yourself to working within a crowded market when there is so much untapped opportunity at your fingertips?”

Manos notes that many of the fundamentals of residential and commercial property lending are the same.

“They are both bricks and mortar – land is the main component and, most importantly, location is absolutely critical,” he says. “Where it differs and where complexity comes into play are the factors that can influence the lease.”

Expanding further, Manos explains that there are different classes of commercial property: office, industrial and retail.

“With commercial property lending, it’s important to understand the profile of the lease, including who the underlying tenant is or may be,” he says. “The key considerations for commercial property lending include the viability of the lease, the attractiveness and versatility of the property, and the leasing business’s ongoing profitability and/or business model.”

Manos points out that the COVID-19 situation provides an object lesson.

“For example, for our hospitality customers, cash flow comes at a risk, and it’s important that you and your client have a good understanding of the viability of both the underlying tenant and the broader industry,” he says.

Mohnacheff adds that maintaining good communication during the current crisis is also crucial.

“The most obvious challenge is navigating

22

LENDER’S TAKE How can brokers build trust?

“Brokers are building relationships and establishing trust with their clients, mostly for the purpose of assisting them with a home loan. If clients know that their broker can also assist with their commercial property needs, they may be more likely to return to that broker because they value the relationship and the guidance provided in the past.

“From a product diversification perspective, commercial property is a great introduction to commercial lending and can be a natural progression for residential brokers. If you don’t help your customer with their commercial needs, it leaves the door open for a broker who will.”

Q

Angelo Manos, general manager commercial broker, ANZ

“What’s most important for brokers across all areas of lending is to continue communicating with customers and ensuring they are aware of all the ways that you can help” John Mohnacheff, Liberty

the effects that COVID-19 is having on our business community and trying to ascertain the best course of action,” he says.

“What’s most important for brokers across all areas of lending is to continue communicating with customers and ensuring they are aware of all the ways that you can help.”

Going the extra mile for borrowers 2020 has presented its challenges, and the immediate future is uncertain, but Mohnacheff believes that looking ahead there will still be positives.

Street adds, “A pick-up in business activity should also equate to a resumption in demand for industrial property. This is in part due to the enforced social isolation

which has accelerated moves to online shopping, spiking the demand for warehousing space and expansion of logistics.

“It’s also reasonable to expect smaller retail units in inner-city areas to recover.

However, shopping centre tenants are likely to suffer in the near term, and landlords are having their challenges as tenants both big and small push back on leasing costs.”

Manos says, “What we are going through with COVID-19 is unprecedented. However, if the Australian economy returns to what we consider as ‘normal’ and the low interest rate environment continues, it’s likely the demand for commercial property will remain solid.

Notwithstanding the COVID-19 impact, Australian property is still an attractive investment class.”

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SME LENDING A CRUCIAL OFFERING Businesses are struggling for finance across Australia and brokers are in the perfect position to help ACCESS TO finance has been a continual struggle for small business owners, and, over the last couple of years as mainstream banks have tightened up their credit appetite, that has never been truer. But in the latter half of 2019 banks began considering funding more business deals and at the same time interest rates dropped to record lows, opening up competition and providing more credit to businesses.

Despite that, the Sensis Business Index for the quarter to November shows that 35% of business owners found it harder to access finance than in the three months before, an increase of 5% on the previous quarter.

While businesses found it difficult to get finance through the mainstream options, alternative lenders were there.

“2019 was a big year for non-bank lenders,” says Malcolm Withers, Pepper Money’s head of commercial.

“With a decrease in risk appetite and tighter serviceability requirements from traditional lenders, SME clients may have found suitable lending solutions for their unique circumstances difficult,” he says.

“Non-bank lenders were ready and able to provide options that brokers and their SME clients were looking for, offering a wider range of products, personalised service levels and faster turnaround times.”

DECLINE IN BUSINESS REVENUE DUE TO COVID-19 What impact has the COVID-19 crisis had on your business revenue so far?

30% or more decline in revenue

< 5 employees

Less than 30% decline in revenue

66%

64%

No change in revenue

5–19 employees

Increase in revenue

63%

66%

47%

50%

48%

44%

17%

16%

18%

19%

30%

29%

24%

24%

6%

5%

9%

12%

w/e 3 April

w/e 10 April

w/e 3 April

w/e 10 April

20–99 employees 61% 39%

22%

29%

66% 45%

21% 26%

100–500 employees 71% 48%

65% 39%

26% 23%

21%

26%

10%

8%

8%

9%

w/e 3 April

w/e 10 April

w/e 3 April

w/e 10 April Source: ACA Research and TEG Insights, COVID-19 SME Sentiment Tracker

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE METHODS SMES USE TO FUND GROWTH 18.3% 10.4%

`

Borrowing from main relationship bank

Unprecedented time for business

Borrowing from another bank 18.7%

Borrowing from a non-bank lender

3.3% Other forms of debt 83% Own funds 12.8%

New equity

*Percentages do not add up to 100% because multiple answers were allowed Source: Scottish Pacific SME Growth Index, September 2019

An opportunity to diversify SME lending can encompass many things, from financing a new office space to replacement of business assets, or assistance with maintaining short-term cash flow.

Withers says SME clients are looking for dedicated support from experts who understand their businesses and work with them to help them grow, while navigating their lending needs.

“They are looking for ease and accessibility of funds so they can focus on what is important to them: running their business,” he says.

“This presented an opportunity for brokers to evolve and develop to offer more than just residential lending. Smart mortgage brokers have adapted their business model to provide the personal relationship a SME client wants but that may not have been available from their traditional lender.”

Mortgage brokers have clearly seen the need to diversify into business lending, according to figures from the MFAA that show a record number of mortgage brokers writing commercial loans.

As an aggregator, PLAN Australia has spent the last year broadening its panel of SME lenders to enable greater product diversity and competition. The group’s head

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rejuvenated by the new skills and processes of a different type of credit.

“It is a unique type of finance and can be quite creative and strategic.”

of southern region, Brad Clucas, says PLAN has seen an increase in off-panel private funders, particularly in some of its larger and more complex commercial transactions.

The group has also spent much of the last 12 months ensuring that mortgage brokers understand the opportunities available in the SME lending space.

Clucas explains that if a broker can offer residential, small business, asset finance and

At major bank NAB, Chris Thomas, general manager, commercial broker, believes the most successful brokers will be those that are fully entrenched within their customer’s lending journey.

As banks and lenders pull back from lending due to the uncertainty, Thomas says brokers need to respond by looking at things differently. Where lenders used to see past performance of a business as a predictor of future success, this is not possible now.

“As the trusted advisers of SMEs, brokers are going to need to have conversations with their customers more frequently and around shorter time frames to ensure they are prepared for where they are going to be in this fluid business environment,” Thomas says.

There is a growing need among SMEs for brokers to play that role of adviser, he says, particularly after the “perfect storm” of a record bushfire season, unpredictable weather events and now COVID-19.

“In the current business environment, there is even greater intensity around this role and

“Brokers will play an essential role in helping SMEs navigate the uncertain months and possibly years ahead as we rebuild the economy” Melanie Kafka, PLAN Australia commercial finance, the client does not need to go anywhere else.

“That’s what it’s all about – retaining the client and developing a deeper relationship with them and their additional finance needs,” he says.

“What we have found is residential brokers that venture into SME lending often feel

the obligation for brokers to be ‘closer’ to their customers than ever before,” Thomas says.

This means understanding that, whatever conditions and challenges these businesses are facing today, their needs could be vastly different in two weeks’ time.

“Brokers need to understand what financing opportunities are available to their

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4/05/2020 12:34:58 PM

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE customers in the current environment and what conversations will need to happen with the various stakeholders and suppliers, such as banks, to make this possible,” he says.

“Part of this also involves making sure customers are across the government’s latest announcements to support SMEs, including concessions around tax relief, relief measures aimed at assisting a business in retaining their employees, and arrangements with landlords for affected businesses.”

PLAN’s head of northern region, Melanie Kafka, says measures like these have been a driver of significant enquiries over the past two months, but warns that this is where broker expertise comes in.

“While those measures are a fantastic initiative during this challenging time and of critical importance to some businesses, they may not be the right option for everyone,” Kafka says.

“It largely depends on the circumstances of each business. That is where brokers can be of huge value. Government stimulus measures should essentially be considered alongside a panel of alternative options that are still available and viable for many SMEs.”

The opportunities will continue With the uncertainty of the next few months, it is not only for the purpose of helping SMEs that mortgage brokers may consider diversifying. Pepper’s Withers says that as

the property market quietens, SME lending may assist brokers in finding supplementary leads to help their own businesses.

“Almost every self-employed client is a business owner that may currently be concerned about the impacts of COVID-19,” he explains. “By actively reaching out to selfemployed clients and having a deeper understanding of their businesses and their concerns, brokers may be able to support SME clients now and into the future. This could help create a client for life.”

credit advice and broader assistance when it comes to optimising working capital, establishing a healthy cash flow, and identifying when and where a business needs to consider a different type of credit facility.

“Brokers will play an essential role in helping SMEs navigate the uncertain months and possibly years ahead as we rebuild the economy.”

As social distancing continues, NAB is prioritising digital enhancements to ensure that it can better service brokers and SME

“In the current business environment, there is even greater intensity around this role [as adviser] and the obligation for brokers to be ‘closer’ to their customers” Chris Thomas, NAB Kafka adds that “education is key” for brokers. PLAN provides ongoing education, masterclasses, and training to help brokers better understand the small businesses they are working with.

Looking at the opportunities now, she says they will continue to grow.

“Many industries are going through significant hardship and challenges and will continue to do so,” Kafka says. “Brokers can provide

customers. Thomas also believes the scope for mortgage brokers will continue to expand.

“The broker-customer relationship will be enduring rather than just single transactions, with a strong focus on knowing their customers and delivering outcomes that are tailored to their individual requirements,” he says. “The current COVID-19 crisis is an immediate opportunity whereby brokers can demonstrate this type of value.”

BUSINESSES SEEKING FINANCE, 2017/18

0-4

200+

20-199 employees

employees

employees

34%

23%

20%

12%

employees

5-19

Source: Australian Banking Association, SME Lending in Australia 2019

26

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ASSET AND EQUIPMENT FINANCE BROKING BETTER BUSINESS ASSETS Asset finance is emerging as a popular area of commercial lending for mortgage brokers considering diversification. But what exactly does it involve?

IN 2020, mortgage brokers tend to wear multiple hats in their daily roles. Diversifying beyond residential helps them guard against the risk of stagnation during markets in downturn, and branching into commercial property has proven to be a popular solution to complement their business.

Yet for Alan Rowlands, finance executive at Specialist Finance Group, such an approach is still too narrow. Brokers, he suggests, should be looking at other areas of lending that may be linked to both the residential and commercial property needs of their clients – specifically, asset and equipment finance.

Asset finance, Rowlands explains, allows businesses to purchase or lease assets that help produce income without having to use their own working capital.

“We used to refer to it as hire purchase, and it’s pretty broad, as you might imagine,” Rowlands says.

“I think it would be fair to say that the average person thinks of it in terms of large-scale purchases like trucks or heavy machinery. But in truth, it refers to just

about any piece of equipment that can be used by the business to generate income, all the way down to computers and printers.”

But why diversify into such territory at all? If you’ve already advanced into commercial from residential or vice versa, is it worthwhile?

“First and foremost, if you’re not looking after your own customers with asset finance, there is a chance that someone else will,” says Rowlands.

Furthermore, Rowlands explains, not only does diversification support the growth and sustainability of your business but it also helps self-employed and SME clients to grow their operations. Lots of business owners aren’t actually aware that such loan products exist, and as a result may opt for products available from other providers that are either inappropriate or could potentially increase their long-term debt.

“You can provide your client with a broader service proposition beyond just residential home loans,” Rowlands says.

“Certainly, there’s a learning curve, but it’s all knowledge that can be built up over time.”

A LOOK AT ASSET AND EQUIPMENT FINANCE Advantages Access equipment quickly Regular repayment schedule Use new equipment rather than personal property as security But be aware Can cost more Restricted use of asset Penalties for termination of contract Best for New businesses or businesses that want to avoid relying on personal property security Source: ASBFEO Business Lending Guide

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE NUMBER OF MORTGAGE BROKERS ALSO WRITING COMMERCIAL LOANS 4,000 3,500

3,668

3,617

3,481

3,670

3,000

2,932 2,500

2,647 2,374

2,000 1,500

1,673

1,641

1,000 500 0

Apr 15–Sep 15 Oct 15–Mar 16 Apr 16–Sep 16 Oct 16–Mar 17 Apr 17–Sep 17 Oct 17–Mar 18 Apr 18–Sep 18 Oct 18–Mar 19 Apr 19–Sep 19

Source: MFAA Industry Intelligence Survey

“If you’re not looking after your own customers with asset finance, there is a chance that someone else will” Alan Rowlands, Specialist Finance Group Another key advantage that this form of diversification offers is that it doesn’t necessarily require a lot of legwork in terms of sourcing new customers. If you’re using a smart CRM, you should already have an existing client base and prospects, and identifying those who are sole traders or SME owners should be a relatively simple process.

“If you’re looking to diversify your business, the best place is to start is with your existing clients,” says Rowlands.

“If you were to look through your existing book of business, you’d no doubt find brokers with self-employed clients who

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have business finance needs and would be happy to have your help.”

Business owners love to talk about their business and the future plans they have for that business, says Rowlands. Conversations with them are an opportunity to learn about their processes and the industries they service, the equipment they use, and whether they are facing any challenges.

“This can open up the door to asset finance, in addition to business finance, cash flow lending and insurance premium funding,” says Rowlands.

Rowlands also notes that a good broker should always be on the lookout for

products and services that align with their clients’ needs.

“It’s an ongoing conversation,” he says.

“Good brokers have their finger on the pulse of what their clients do and what their clients need – but conversely, clients also need to be made aware of what their brokers can do for them. When the need does arise, the client can be confident that his or her broker can assist with their asset finance needs.”

Of course, Rowlands says a mortgage broker just starting out in this arena can’t realistically be expected to know everything – it’s such a broad field. What’s more important is knowing the basic details and being able to access additional information or a quote as necessary. As with any other area of broking, knowledge is built through a combination of time and experience.

“Don’t be afraid of what you don’t know,” says Rowlands. “Ask lots of questions and get guidance from your aggregator and

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lender BDMs. If possible, new asset finance brokers should consider shadowing more experienced brokers or ‘spot and refer’ deals to specialist asset finance providers in order to learn the ropes.”

However, Rowlands does caution that brokers and clients should also be working with an accountant to assess other factors – how the loan is going to be structured, for example. Due diligence by both the client and the accountant is important before undertaking a new lending facility.

“One of the unique things about broking in this space is that the item being financed is often the form of security for the loan,” explains Rowlands.

“It’s also usually depreciating in value from day dot, so you need to make sure you have all of the right info at hand from the start. You need to be looking out for your client’s best interests, and sometimes that means not getting them the loan if they’re not in a position to handle it.”

Rowlands says there is considerable help available for brokers who are looking to branch out into new territory. It doesn’t have to be an intimidating process if you surround yourself with the right people and utilise the right tools, he explains.

This is not to suggest that everything will necessarily be smooth sailing. The pandemic has led to unprecedented challenges for Australian businesses, and its ongoing potential effects on the Australian economy remain uncertain.

Rowlands points out that many asset finance lenders have also announced temporary changes to their application processes and credit policies, especially for new-to-bank customers or those industries adversely impacted by COVID-19. And some lenders have temporarily suspended accepting new accreditations or transfers.

Nonetheless, Rowlands believes that over the coming months there will be numerous opportunities for brokers to reach out to clients and discuss the possibility of applying for asset finance.

“Changes to policies notwithstanding,

HOW BUSINESSES PLAN TO ACCESS FINANCE

If you need to access finance in the next six months, which of these would you consider?

Credit card

Overdraft

Bank loan

16%

Equity capital raising

Other

21%

12% 19% 32%

Source: Sensis Business Index, November 2019

“Don’t be afraid of what you don’t know.

Ask lots of questions and get guidance from your aggregator and lender BDMs” Alan Rowlands, Specialist Finance Group lending rates have never been more competitive,” says Rowlands. “The end of the financial year is approaching too, so equipment suppliers are probably going to be keen to make deals close to tax time, particularly in light of the wider economic downturn.”

Rowlands also points to the initiatives the Australian government has introduced in order to support the country’s businesses

and economic growth in the short term, and to encourage a stronger economic recovery post COVID-19.

“Many of our members are already helping their SME clients to finance new equipment and take advantage of the increased instant asset write-off and accelerated depreciation provisions (for example Backing Business Investment) as part of the stimulus package,” says Rowlands.

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE

DEBTOR FINANCE A CRITICAL SOLUTION

Helping businesses through cash flow challenges

With businesses more likely to be struggling with their cash flow during the COVID-19 crisis, brokers can play a vital role in ensuring they have the funds to survive

‘CASH IS KING!’ While this expression is thrown around all too often, for small businesses staring into the challenges of 2020, it is a very real truth they are having to face.

According to research by Scottish Pacific and East and Partners, the average time that SMEs wait to be paid is 56 days, and smaller businesses tend to wait longer than the larger ones.

“Money that could be used to expand revenue and invest in growth is being tied up for too long, as SMEs struggle to be paid within a reasonable time frame,” says Scottish Pacific CEO Peter Langham, On average, the lender found that SMEs have almost a third of their revenue tied up in outstanding invoices, with 16% locked into those outstanding for more than 90 days.

Langham says the research highlights the importance of businesses finding the right funding to unlock working capital, and this is where debtor or invoice finance comes in.

Working much like an overdraft or line of credit that is not secured against the family

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demand, as they may be during the coronavirus pandemic. Debtor finance can provide extra cash when sales are growing and staff and suppliers need to be paid on time.

“Most of our clients like the simplistic idea that, with debtor finance in place, if sales increase they know they have the extra working capital to support that growth,” Langham says.

home but against the money a business is owed, it generally provides up to 95% of the value of outstanding invoices, depending on the nature of the business, who the customers are and how much they pay.

The repayments come by way of collections when the customers pay their invoices, and

Cash flow is the most common cause for concern for business owners. According to a report by the Australian Banking Association last year, maintaining short-term cash flow or liquidity was one of the top three reasons businesses sought finance in 2017/18.

“Debtor finance can help business owners access more reliable cash flow so they can manage fast growth or deal with winning a big new client, long payment times and more,” Langham says.

In the current environment, maintaining strong cash flow is “more critical than ever”, he adds. In in the 30 years that Scottish Pacific has been around, Langham says it has seen debtor finance prove itself through all stages of business – in good times as well as during the GFC. “Along with the challenges the COVID-19 pandemic is causing, many new opportunities

“We all know that cash is king. Without it, even the most successful businesses will struggle” Peter Langham, Scottish Pacific the borrowing limit is based on how much you are owed at any point in time.

Langham says the finance can be used as main working capital for the business, or as extra cash to pay suppliers earlier or invest in growth, and has even been used for business acquisitions or change of ownership.

One area in which it can be particularly useful is when businesses are seeing increased

may present themselves, and those businesses with cash will be able to take advantage of these opportunities,” he says.

Finance brokers are already helping businesses with things like debtor finance, thanks to COVID-19. James Macfarlane, director of HLB Debt Advisory, has been offering debtor finance for three and a half years and is being asked to help now that

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WHY SMALL BUSINESSES NEED FINANCE Top 3 reasons businesses employing 0–4 people seek finance, 2017/18

40%

Maintain short-term cash flow or liquidity

32%

Ensure survival of business

24%

Replace equipment or machinery Source: Australian Banking Association, SME Lending in Australia

the pandemic is impacting cash flow.

“I have been mandated recently by a strong group for three of their businesses as they are expecting debtors to pay them more slowly and also maybe some of them will not survive, so having limits in place will reduce the need to raise equity or other forms of cash,” he explains.

implemented faster than alternatives.

“Debtor finance may be the most likely option to take advantage of the opportunities out there for other businesses that are growing quickly against the trend and are unable to source the funds at the speed of demand for their product or service,” Slack says.

“Debtor finance may be the most likely option to take advantage of the opportunities out there for other businesses who are growing quickly” Chris Slack, The Finance Consultancy Agreeing that cash has never been more important, Chris Slack from The Finance Consultancy says debtor finance is a great alternative for those businesses that are not eligible for the government-supported small business loans. He says the debtor finance option can give a business the sort of access and flexibility it needs and can arguably be

Even outside of global pandemics, debtor finance plays an important role in supporting businesses through everyday challenges. Slack explains that this might look like businesses being able to access discounts for early payments to suppliers, or it might be the only way they can pay rent or staff due to the seasonality of some businesses.

A LOOK AT DEBTOR FINANCE Advantages Access to funding grows as the business grows Option to include receivables management Use accounts receivable rather than personal property as security But be aware Only for B2B businesses Costs can be higher for new or higher-risk businesses Best for Businesses that are unwilling or unable to offer property as security, and offer customers credit terms of more than seven days Source: ASBFEO Business Lending Guide

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE

REASONS SMES STRUGGLE WITH CASH FLOW

0.2%

Issues with government red tape/compliance

9.5%

Lost a key supplier due to insolvency 21.3%

Lost a key debtor due to insolvency Customers paying late

72.3% 27.8%

Had to write off bad debts Suppliers reducing payment terms

22.0%

39.4%

1.5% 3.1%

40.1%

Unable to take on new work due to cash flow restrictions Difficulty meeting tax payments on time Declined from a lending product Other

5.2%

No cash flow issues in the past 12 months

Source: Scottish Pacific SME Growth Index, September 2019

Slack says the “secret” here is that it is very rare for someone to ask for debtor finance, other than those who already use it, and often it becomes an integral piece of a wider puzzle.

“Does a client source items from overseas?

Do they have an equipment need? Are they looking to acquire another business but don’t have the available cash? Do they need a little term debt for their business?” he says.

“Debtor finance can tie any and all of these scenarios together, as lenders can gain more comfort with a transaction when they have that greater level of oversight and security. So, it’s more that I’m promoting it as part of the suite of options for solving a problem, rather than something that people come to me for.”

Opportunities for brokers Beyond the benefits for SMEs, Langham says offering debtor finance provides a real

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positive for brokers that are looking to forge stronger relationships with their clients.

Scottish Pacific looks after businesses that want to grow, and as they grow, so do the brokers’ businesses.

“That business has ever-increasing needs for additional funding to support that growth – be it for machinery, vehicles or even the owner’s personal needs, such as a home loan,” Langham explains. “As the business grows, so does the broker, and this creates a deeper relationship between brokers and their clients.”

To ensure that brokers identify the opportunities available and are able to assist their business customers, Scottish Pacific partners with them to help them understand how to spot clients who may benefit from debtor finance.

As a broker who has now written more than $95m in debtor finance loans over the past two years, Macfarlane encourages

brokers to take lenders up on these partnerships and training sessions.

“The most important thing is to understand how to finance businesses, and the options that are available, as debtor finance is just one of the options and most often is not the only solution,” he says.

“The keys are understanding the business’s P&L, balance sheet and cash flow, what the business is, what it does, and then matching that with the products and solutions available.”

Slack adds that the BDM support across all of debtor finance is “superb” and is the only way he has managed to grow in the space so quickly.

On the opportunities for brokers, Slack says, “If you are looking at B2B clients and simply defaulting to an unsecured option when a bank says no, then you are doing them a genuine disservice by not presenting debtor finance as an alternative.”

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UNSECURED BUSINESS LOANS KEEPING BUSINESS ALIVE With both the property and business markets struggling, unsecured business loans are providing a way out for many

WHEN ASKED what was holding them back from starting a new business, 60% of Australians said it was access to finance, according to YouGov research last year on behalf of the Australian Banking Association.

While there are a number of options businesses can consider when it comes to finance solutions, new or potential business owners struggle to get the capital they need.

Furthermore, in the September 2019 SME Growth Index published by Scottish Pacific, only 5.5% of SMEs wanted to use their property as security for loans.

“Most brokers out there are experienced and really understand the various finance products that are on offer” Yanir Yakutiel, Lumi The option of unsecured business lending could be the solution they are after.

An unsecured business loan does exactly what its name says: it is a loan not secured by

LENDER’S TAKE Why and how should brokers look to unsecured business loans?

“Unsecured business lending is a way for them to support their existing clients; it’s a way to diversify their business and monetise ideas they have in customer relations, and I think the property market is going to take a longer period to recover.

“I think they need to understand the business; how cyclical or countercyclical it is, how much does it turn over a month. It sort of gives you a very quick guide as to how big or small the business is. The brokers should contact us, contact our sales team; we’ve got promotional material that can help brokers. I think the easiest way to understand is to call us with a scenario, say ‘this is what we have, can you help’, and our BDMs and account managers will be more than happy to workshop that with a broker.”

Yanir Yakutiel, founder and CEO, Lumi

an asset. Instead, the lender will look at the business itself to determine its credit­ worthiness.

Whether businesses want to use an unsecured business loan to purchase an asset or piece of equipment, to pay invoices and boost their cash flow, or to pay their staff ’s salaries, this type of loan acts as a short-term solution so they can get their businesses back on track.

Bill Baker, CEO of lend.com.au, says managing cash flow is the most difficult part of being a start-up.

“Getting to the next stage you either have to borrow money from family, or you have to have some form of security in order to get the funds into your business,” he says. “Without either one of those it’s not very easy to grow your business and this is where the unsecured business loans come into their own.”

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SPECIAL REPORT

COMMERCIAL LENDING GUIDE

CORONAVIRUS SME GUARANTEE SCHEME Under the government’s Coronavirus SME Guarantee Scheme, businesses with a turnover of up to $50m will be eligible to receive unsecured loans from participating lenders. The government will provide eligible lenders with a guarantee for loans with the following terms: Maximum loan size of $250,000 per borrower The loan term can be up to three years, with an initial six-month repayment holiday The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan

Understanding unsecured business loans For a lender to determine whether it might want to offer an unsecured business loan to a borrower, it often looks at things like the projected cash flow of the business, the time

as a cafe or restaurant that needs to buy stock or inventory.

This does not mean that a business owner cannot use an unsecured business loan for an asset purchase, however. For business owners, the number of finance solutions can

“Just because the economy has come to a standstill, that doesn’t mean your bills have stopped; people have still got to live” Bill Baker, Lend.com.au in business, recent bank statements, and what the cyclical life of the business is.

Lenders may typically also ask for a personal guarantee from the director of the business, leaving the guarantor personally responsible if the business cannot meet its obligations.

Yanir Yakutiel, founder and CEO of unsecured lender Lumi, says this typically applies to those businesses that don’t have any tangible assets to use as collateral, such

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be overwhelming, particularly if they overlap.

Yakutiel says this is where the experience and skill of a good broker comes into play.

“Most brokers out there are experienced and really understand the various finance products that are on offer,” he says.

Brokers working with their business customers will need to understand what the business is trying to achieve, what the cash flow profile of the business is, and what the

risk profile and price stability of the borrower look like.

Every business is different, Yakutiel explains. While some business owners may be happy to take out a second mortgage as security, others may want to pay a little bit more and take out an unsecured loan so they don’t put their home at risk.

He says Lumi sees scenarios in which borrowers have multiple businesses and want to use the equity in their house to support just one of those, or there may be multiple owners of the business and they like to segregate because no one wants to put their house on the line.

“Like anything else, it becomes about risk allocation and pricing for that risk and finding the most suitable product to meet those specifications of the customer,” he says.

“That’s why we think brokers are really important, and brokers play a really important part in our distribution strategy, because they are there with the customer.

They understand the customer a lot better than us.”

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The impact of COVID-19 The problem of offering unsecured business lending in the current environment is that lenders will find it hard to ascertain the creditworthiness of a business in such difficult circumstances. Yakutiel says that while current demand for unsecured business loans is “through the roof ”, the suitability of this type of lending has gone down because businesses are having such massive impacts on their cash flow.

“The problem is that it’s very hard to underwrite deals based on traditional models [at the moment],” he explains.

“The traditional models are based on the business trading, having a consistent cash flow, etc., and that’s already been thrown into the wind because of the coronavirus.”

For the short term, Yakutiel says, either secured products or longer-term unsecured products will be more relevant, but he remains positive.

“I think once things start levelling out in the next three, four months and businesses start trading out, the demand for unsecured lending is going to keep growing at an exponential rate,” he says.

One positive for unsecured business lending right now is the government’s Coronavirus SME Guarantee Scheme that will see them provide a guarantee of 50% to SME lenders for new unsecured loans to be used by eligible businesses as working capital.

The aim of the scheme was to ensure the lenders’ willingness and ability to provide credit to SMEs so they could survive the coming months.

“Brokers play a really important part in our distribution strategy, because they are there with the customer.

They understand the customer a lot better than us” Yanir Yakutiel, Lumi But according to research by Lend.com.au back in April, four in five businesses did not believe banks could approve and settle these loans as fast as they needed it. One in three businesses believed that non-banks would be able to deliver these loans faster.

BARRIERS TO STARTING A BUSINESS

60%

Access to money

42%

Life circumstances

36%

Lack of experience

34%

Desire for income certainty Lack of time

In the same survey, 70% of respondents said they needed the finance to survive, and 12% said the timing was already too late for their business.

Lend.com.au’s Baker says the timing was so important for these businesses because many of them did not know if they could keep their staff or pay their bills.

“Just because the economy has come to a standstill, that doesn’t mean your bills have

26%

6% None of the above

stopped; people have still got to live,” he says. “We all need money to survive, and this is why having this speed of access to funds is the most crucial part. Building a business takes a long time – finding the right staff, making sure you’ve got the right supply chain; you need to make sure you’ve got the right structure, and all that takes a long time for a small business to build.

“To wipe that overnight because you can’t afford to keep your staff, or you can’t afford to keep your current suppliers, when that disappears really quickly, for someone to start rebuilding again, most people won’t be able to do that.”

However, Baker adds that brokers are in a good position because they understand their clients’ needs.

“At the moment there’s a lot of confusion coming from the lenders, and this is where the problem lies,” he says.

“Unfortunately, the problem is there’s going to be a bottleneck, because everyone’s going to process applications all at once.

Once the lender comes out and says ‘these are my rules of lending to an SME’, then the broker will be able to capitalise on that really quickly.”

Source: YouGov research for the Australian Banking Association, April 2019

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SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

2020

TOP 10 COMMERCIAL BROKERS Now more than ever, commercial lending is an important tool in the brokerâ&#x20AC;&#x2122;s toolkit. These commercial brokers have shown what it takes to succeed in the industry

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SPONSORED BY

AFTER LAST YEAR’S Top 10 Commercial Brokers report, in which many brokers talked of longer turnaround times and tightening credit appetite, 2019 seemed to turn itself around.

Most brokers in this year’s listing have described banks leaning more into small business lending, and increasing competition which has led to record-low interest rates.

The last few months have obviously changed things yet again, and brokers are facing new challenges as they cope with shifting appetites and an uncertain economy. The commercial finance space has been particularly affected by the coronavirus pandemic: many businesses across Australia have been forced to close their doors to customers, and while some are able to continue serving in a reduced capacity, there are those that are struggling to keep up with overheads and supply costs, and many have decided to close up completely.

Commercial finance brokers have an incredible role to play here, as more businesses will undoubtedly seek financial help.

MPA’s Top 10 Commercial Brokers talk about some of the ways in which they have seen businesses affected, and how they are preparing their own businesses to deal with these changes.

The majority of loans settled by 2020’s top brokers were in development finance, followed by commercial real estate. This was the same proportion as last year, but this year the number of loans for SME finance rose considerably. Making up just 3.6% of our commercial brokers’ loans in 2019, SME finance comprised more than 20% this year, demonstrating the growing

appetite of banks and non-banks in this segment, and also the importance of this market.

The value of loans settled also shows the differences in the commercial finance market from a year ago. While the average value of loans in this year’s list was 28% higher, at more than $185m, the lowest value showed a drop of around 17% from the value of loans written by the 10th place broker last year.

It was the higher value of loans at the top end of the list that brought up the average, with the number one broker writing 93% more in loans than the number one last year.

Our Top 10 brokers might have had a more positive market to work in before the pandemic hit, but there are other traits they share that have surely secured their places in this year’s list.

Most of these brokers have recognised that specialising in one area of commercial finance does not provide the best service to their clients. While many have broadened their market so they offer a range of different commercial transactions, often bringing on new team members to provide an all-round service, others have expanded further and opened financial planning arms, or are offering solutions for home loans.

Read on to see how each of these brokers is adapting and growing their business, and for their advice on how mortgage brokers can expand their offering too.

Thank you to everyone for sending in their submissions, and particularly to this year’s Top 10 for taking time out to talk about their businesses.

A MESSAGE FROM OUR SPONSOR On behalf of La Trobe Financial we would like to officially congratulate the 2020 MPA Top 10 Commercial Brokers for achieving the industry’s most recognised and highly sought-after honour for commercial brokers in Australia. This prestigious list seeks to recognise the highest-performing brokers and highlights the contributions they have made to our industry and within their own communities.

As the industry’s top performers, they have set a benchmark of excellence that can be celebrated, respected and ultimately provide a culture and set of practices that others can aspire towards.

At La Trobe Financial, our purpose since 1952 has been to provide financial solutions to underserved markets, and we are therefore, now more than ever, honoured to support this important sector of our industry.

Congratulations once again to these brokers for their significant achievement, and we wish them continued success with their cause to make a difference.

Cory Bannister Chief lending officer, La Trobe Financial

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SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

10

Total value of loans settled

$65,246,750

Number of commercial loans settled

10

Average commercial loan size

$6,524,675

Years as a commercial broker

20

Aggregator

Connective

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DANIEL KWAN As commercial property takes a hit from the coronavirus pandemic, the director of GM Capital Solutions says he is prepared

A TRULY diversified broker, Daniel Kwan offers business, commercial property, construction finance and home loans through his business. Kwan is based in Sydney but operates on a national level, and the majority of his loans over the past 12 months were for commercial property.

The director of GM Capital Solutions started out in finance in Hong Kong before moving into banking in Australia in 1984. Sixteen years later, he opened his broking business.

“I went into broking as the market conditions were favourable, and I liked the flexibility it gave me to be my own boss and be outside the corporate world,” he says.

Over the last year, Kwan has written more than $65m in loans and says his success is down to a few key things: protecting the lender with bankable transactions, keeping up with financial markets, being personal and caring about the client, and, importantly, listening to his clients’ needs.

“Meet their expectations in a timely fashion and deliver a financial solution like the ‘Private Bank of the Private Bank’,” he says.

The uncertainty around the coronavirus pandemic has left the commercial property market in a negative state, Kwan says, as businesses and people are affected by reduced incomes and the flow-on effect of that.

Before the pandemic began, he says he had seen a very competitive lending environment, but this has reversed since mid-March. He has noticed that lenders are being cautious as they “play catch-up” – and some have suspended new lending altogether. Kwan says many have adjusted their risk appetite by lowering loan amounts and loan-to-value ratios, increasing pricing and asking more questions. He has also seen lenders taking mortgages over other properties and requiring higher presales on development projects.

Kwan is ensuring he deals with all the major banks, non-banks, private funders and offshore funders and is now seeing an increasing volume of enquiries.

As he prepares for further challenges in working through the changing lender guidelines, he says he is

“I liked the flexibility [broking] gave me to be my own boss and to be outside the corporate world” set up to maximise his resources in the most efficient way by internally workshopping deals as they come in.

“We are also setting expectations with clients upfront and clearly, so they know the market conditions and the likely approval terms,” he says.

For brokers coming into the commercial space, Kwan says it can be tempting to try to be “a jack of all trades”, but he advises that this might not be the right time to do so.

“In tough times, this becomes inefficient and it’s near impossible to be across so many products and markets,” he says. “Find your niche and become great at that. I would suggest looking to form partnerships that grow your capability or offering.”

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SPONSORED BY

REN WONG When he realised his home loan borrowers needed help in other areas, the CEO of N1 Loans began looking at other solutions

9

N1 LOANS transitioned into commercial loans back in 2018, and around 60% of its annual revenue is now coming from commercial finance. CEO Ren Wong says he found many of his home loan borrowers were self-employed, and he realised their finance needs expanded far beyond a mortgage – that’s when he decided to explore other products.

Having written almost $67m in loans in the past 12 months, Wong puts his success down to “being in the right place at the right time”.

Wong’s loans are mostly split between unsecured lending and SME finance, so he is seeing the impact that the pandemic is having on business owners.

“When we have general economic uncertainty, we see a lot of quality businesses being affected, and it's not due to management of the business but rather the market conditions,” he says.

“Those businesses that we know can survive and thrive post the health crisis, we want to be able to help more.”

Because of the current environment, Wong has seen enquiries surge from business owners looking for finance solutions as lenders become more cautious.

But he says he has a side business up his sleeve to help with as many solutions as possible.

“Our value is to bring our knowledge to the table and bridge the funding gap between both sides – lenders and borrowers,” Wong explains. “Having a side business accounting firm helps a lot when we need our accountant colleagues to study the numbers, and to add more value to clients.”

To prepare for the next few months, when he expects to see business lending activity contracting and increased due diligence, Wong says N1 Loans is focusing more on non-transactional work. He suggests the broker model needs to evolve to provide more consulting, helping borrowers with complicated needs to navigate the challenging environment.

Using his accounting team, N1 plans to be more involved in scenarios and to help with budgeting, forecasting and managing cash flow.

Total value of loans settled

$66,946,525

Number of commercial loans settled

130

“Those businesses that we know can survive and thrive post the health crisis, we want to be able to help more” For brokers starting out in commercial finance, Wong says it is important to partner with the right people, such as agents who specialise in commercial properties, accountants and financial planners with self-employed clients, and solicitors and advisers that are working with clients with more complicated finance needs.

“We need to equip ourselves with more knowledge and go beyond the traditional transactional work, then after some time we will realise we don't need as many clients to continue growing; we just need to be able to cater for a limited number of clients but with deeper relationships and more in-depth work,” Wong says.

Average commercial loan size

$514,973

Years as a commercial broker

7

Aggregator

Finsure www.mpamagazine.com.au

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4/05/2020 11:25:37 AM

SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

8

Total value of loans settled

$91,030,406

Number of commercial loans settled

44

Average commercial loan size

$2,068,872

Years as a commercial broker

15

Aggregator

Connective 40

CAMERON PERRY As the director of Perry Finance gears up for multiple challenges ahead, his main focus is on supporting clients who are facing hardship

RISING TWO places from last year and increasing his loan value by 15%, Cameron Perry says he has been very fortunate to have great support around him. Over the past 12 months he has invested time and resources into structuring his business and building his team.

Alongside Perry Finance, which handles residential and commercial mortgages, Perry launched a new brand called Melbourne Finance and Equity Group for private lending and development funding, which he says helped him clarify his offering in the market.

Over the past year, the commercial lending market has seen a lot of private capital as well as pricing competition between the banks, Perry says. But credit has remained conservative, and there’s been an increase in regulation, “probably as a result of the banking royal commission”.

Now there are new challenges to face.

Seventy per cent of Perry’s loans over the past 12 months were for development funding, but he says this is a really difficult space at the moment, with banks reluctant to lend to developers. While private lenders are usually a good alternative, Perry notes that much of this money has exited the market for development deals as investors become more nervous about the effects of the COVID-19 lockdowns.

He remains positive though. “There are always opportunities, and I think there will be plenty of demand for landholding facilities over the next six months as projects are stalled and there still is money around for good projects,” he says.

The remaining 30% of Perry’s settled loans were for commercial real estate, which he says had a strong 12 months, but the pandemic has brought things to somewhat of a standstill due to uncertainty over the viability of commercial tenancies.

The current environment presents many challenges for brokers, with fewer active lenders in the market, the banks preoccupied with helping their existing clients, and the threat of increased turnaround times.

Perry also faces his own challenge in managing his staff who are working remotely.

“We are also focused on servicing our existing client base and making sure any of our clients that are facing hardship are well looked after” To prepare his business for the coming months, he says he has consolidated the lenders on his panel that are still open for business and are formulating products for the likely scenarios ahead, such as existing loans rolling over and projects being delayed.

“We are also focused on servicing our existing client base and making sure any of our clients that are facing hardship are well looked after,” he says.

“Our team has been working remotely for over a month now, and we were already well prepared for this, so we haven’t dropped at all in our capability to service customers, but there are definitely challenges ahead with managing the current environment.”

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4/05/2020 11:31:48 AM

SPONSORED BY

JASON FALLSCHEER Client service and rapport is key for any broker trying to grow their business, says this client director from Pitcher Partners Finance

7

AFTER WORKING in banks for more than 20 years, last year Jason Fallscheer was presented with an opportunity that would give him the chance to open up more options for his customers. Now, as a client director at Pitcher Partners Finance, he has written more than $93m in commercial loans.

“Having always had relatively secure jobs with one bank’s range of products, it was time for me to do something different and build something new,” Fallscheer explains.

The in-house debt advisory and finance broking business was established in 2019 in Pitcher Partners’ Melbourne practice to assist clients and friends of the firm in navigating the funding landscape and getting the best possible outcomes when sourcing debt.

Fallscheer says the support from the business, acceptance from key clients and encouragement from his aggregator all led to his success in this year’s listing.

“And knowing that when building a business you need to work harder than ever before and that requires support and understanding of your partners and family,” he adds.

Understanding the value of a diverse portfolio, Fallscheer says brokers need a balance across equipment finance, commercial property and home loans. Forty per cent of his loans over the last 12 months were for equipment finance, and commercial property made up another 20%. The rest was split evenly between debtor finance, unsecured lending, SME finance and development.

In the commercial space as a whole, Fallscheer notes that interest rates have never been lower, and he has seen no signs of banks withdrawing their support for business. In equipment finance, in which he wrote a significant portion of his loans, he says rates remain competitive, but the government’s incentive to buy assets and receive an instant tax write-off has come at a time when businesses are trying to preserve cash.

In facing the challenges of the pandemic, the main priority for Fallscheer is to keep in contact with his clients. He sees brokers as having an important role to

Total value of loans settled

$93,600,000

Number of commercial loans settled

24

“The fact that the deal is done and we have been paid does not mean we should not continue to support our clients” play in continuing to support their clients. He is also taking this time to educate the rest of the Pitcher Partners firm about its new finance arm.

“The fact that the deal is done and we have been paid does not mean we should not continue to support our clients wherever possible, as we do not have a business without their support,” he says.

For brokers looking to grow their businesses, Fallscheer says key referral relationships are important, as is the service you provide to clients.

“Clients will appreciate your help when you are delivering value and your work is thorough and well researched,” he says. “This isn’t always about rate, but it’s certainly where most people start and finish.”

Average commercial loan size

$3,900,000

Years as a commercial broker

1

Aggregator

Connective www.mpamagazine.com.au

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SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

6

THOMAS WALTHAM Strong relationships and a client focus have kept the managing director of Capital United in his sixth-place spot for another year

MAINTAINING HIS sixth position from last year

Total value of loans settled

$139,637,432

Number of commercial loans settled

41

Average commercial loan size

$3,405,791

Years as a commercial broker

13

Aggregator

FAST

42

with an impressive increase in the number and value of loans settled, Tom Waltham says his success has been down to strong relationships with clients and lender partners as well as a broad understanding of banking and finance across a number of sectors.

Being solutions-driven and focused on providing a service that meets clients’ expectations results in a lot of repeat business and referrals, says the managing director of Capital United.

The brokerage grew from its establishment in Adelaide in 2007 as a commercial finance business with one client to to one that has been expanded to service clients across a range of transactions types.

“We are a small team of professionals who are passionate about what we do,” Waltham says.

Looking back at the commercial space in 2019, Waltham says he had noticed a trend of increased bias of lenders towards good existing clients, rather than new borrowers, and he expects this trend to continue.

In SME lending, from which just over a quarter of Waltham’s loans have stemmed, he says lenders were increasing their funding allocations and, while core lending parameters and credit principals remained unchanged, more lenders were prepared to lend against balance sheets in comparison to previous years.

“Understanding what certain lenders were/are looking for allowed us to actively target borrowers with a cash flow funding need that could be met by a lender’s product – whether that be for domestic or international trade finance; general working capital finance; debtor finance or other,” he says.

“The strong entry to the market of a number of non-bank lenders also had an impact and has opened up lending to the SMEs that traditionally would not have been able to access this type of funding.”

More than two thirds of Waltham’s loans over the past 12 months were for development finance, but with the pandemic he believes access to this funding will be “extremely challenging”. He says, “We have already seen a number bank of non-bank lenders indicate that they

“We will continue to support our clients and the challenges they face and assist them to navigate the COVID-19 environment” are putting a hold on any new-to-bank development finance applications, rather than pricing for risk, reducing LVRs or increasing presale requirements.”

Over the next few months in the commercial space, Waltham expects fewer transactions and more timeintensive application processes, but with a small and flexible team he says Capital United can look at transactions across all types of borrowers.

“Going forward we will continue to support our clients and the challenges they face and assist them to navigate the COVID-19 environment and the uncertainty around the economic and banking and finance sector. We still have enquiries; however, the enquiries have changed,” he says.

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4/05/2020 11:32:22 AM

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JASON ARNOLD Having seen lenders open up to commercial funding last year, Arnold is now working to help borrowers as this space closes up again

5

IN SIXTH POSITION for the second year running, Quattro Finance managing director Jason Arnold says he succeeds by keeping a close relationship with each client throughout the life of the transaction, as well as strong relationships with banks and non-banks.

Quattro Finance specialises in property development and commercial finance, with 80% of its business coming from commercial lending and the remaining 20% from residential home loans.

Arnold says last year saw banks and lenders open up to more business lending. The traditional banks expanded finance options for SMEs, and new banks entering the market provided competition. The development space, in which he writes the majority of his loans, was growing at a rapid pace, particularly in the non-bank and private sectors.

In commercial real estate as well, Arnold says there was strong appetite for commercial investment finance, especially for those with good tenants and longer-term lease covenants. Lenders were competing for this business, which was driving down rates and fees to historically low levels.

Since COVID-19, however, Arnold has seen new lending slow significantly, with lenders either closing completely or adjusting policies to minimise risk.

It is not all bad news, though. “There is still a strong pipeline of transactions, and once we get through these uncertain times, I am confident the lending market will rebound accordingly,” he says.

As the industry prepares for some tough challenges ahead, Arnold says his most important focus is on assisting clients to survive, helping them navigate the government assistance packages, specific lender hardship processes, and simply “being there to listen and provide general advice”.

“We must also keep a positive eye to the future and ensure we have the knowledge, processes and ability to assist with the regrowth period,” he says. “Finance will play a big role in rebuilding businesses, and we will need to work together to ensure we are providing the best options available to each and every client.”

Total value of loans settled

$140,254,494

Number of commercial loans settled

24

“We will need to work together to ensure we are providing the best options available to each and every client” Technology is also going to play a part in ensuring brokers can stay connected with their clients. While Arnold says tech has not yet had a huge impact on the commercial space in terms of increasing efficiencies, there have been significant improvements in a very short space of time out of necessity due to COVID-19.

As more mortgage brokers diversify into commercial, and finance brokers continue to expand and grow their businesses, Arnold says it is important not to rush.

“Building knowledge and experience takes time,” he says, advising that brokers seek out trusted advice and ensure their processes and procedures are continually adjusted.

Average commercial loan size

$5,843,937

Years as a commercial broker

19

Aggregator

FAST

www.mpamagazine.com.au

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4/05/2020 2:12:49 PM

SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

WHAT AN ELITE COMMERCIAL BROKER LOOKS LIKE IN 2020 The figures from this year's Top 10 Commercial Brokers reflect the shift in banks opening up to business lending, and how brokers are adapting to suit borrowers' needs HIGHER LOAN VALUES IN 2020 As lenders opened up and increased their appetite for commercial funding, this year’s commercial broker figures have risen from the lows of 2019.

While the lowest loan value has dropped below last year's, the much higher values of the top three brokers have brought the average up.

Aaverage total loan volume per broker Up 28% to

$185,596,816

Average number of loans per broker Up from 43 to

51

Loan volume required to enter Top 10

$65m

Combined number of years as commercial brokers

COMMERCIAL LENDING AND TECHNOLOGY Has technology had an impact in the commercial lending space?

Yes

6/10

No

4/10

Our top commercial brokers had a bit more to say on the technology front than whether it had simply had an impact or not. Some said that yes, there had been an impact, but it was a slow burn in comparison to the residential space. One broker said tech had definitely made an impact on smaller deals, but on the larger ones not so much.

Our top commercial broker said the commercial space had not been as impacted by technology because it required much more of a relationship focus.

WHAT ADVICE CAN YOU GIVE TO BROKERS LOOKING TO GROW AND EXPAND THEIR BUSINESSES? “The way we have grown and expanded over the years has been by continually looking for ways of refining and improving how things are done; constantly talking to and building strong long-term relationships with lender partners; listening to what clients want and tailoring a service offering around that; and speaking regularly with our aggregator partners. I have also found it invaluable to regularly collaborate and discuss the banking and finance sector with my peers.”

– Tom Waltham

“Start partnering with the right people. There are agents who specialise in commercial properties, there are accountants and financial planners who specialise in self-employed clients, and there are solicitors and advisers in M&A or administration work who will have clients in need of more complicated financing.”

– Ren Wong

116

44

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4/05/2020 11:32:58 AM

SPONSORED BY

WHAT THEY’RE OFFERING We asked the top commercial brokers what services they were offering and which areas made up the majority of their business. Their responses show a drop in development finance and commercial real estate business since last year, while the proportion of SME loans has grown by around 17%.

Other Equipment asset finance

32.78%

SME finance

Debtor finance Unsecured business lending

“I would recommend taking the time to build systems and processes for your business and then get good support around you. I would also recommend looking into outsourcing as many of the non-core activities in your business as you can, but also to be very careful who you partner with.”

– Cameron Perry

9.18% 4.90%

20.89%

Development finance

Services offered by the average Top 10 broker

1.22% 4.98%

“Find your niche and become great at that. I would suggest looking to form partnerships that grow your capability or offering. Unfortunately, there is nowhere you can readily go for an education in commercial lending, unlike residential. That is why most of the full-time commercial brokers tend to have a background in the space from years working as lenders or in some other technical field.”

– Daniel Kwan

26.05%

Commercial real estate

“Clients will appreciate your help when you are delivering value to them and you show that your work is thorough and well researched. This isn’t always about rate, but it’s certainly where most people start and finish. Don’t assume one bank or funder has the only solution, but know that your service to clients is judged on the service we get from banks, so understanding turnaround times and maintaining good rapport is vital to managing expectations.”

– Jason Fallscheer

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4/05/2020 11:33:08 AM

SPONSORED BY

SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

4

DANIEL GREEN The managing director of Green Finance Group focuses on a unique specialty to continue growing his business and appearing in this list year after year OF HIS 10 years as a broker, Daniel Green has spent

Total value of loans settled

$160,865,432

Number of commercial loans settled

115

Average commercial loan size

$1,398,829

Years as a commercial broker

10

Aggregator

Loan Market

46

nine in MPA’s Top 10 Commercial Brokers list.

Green Finance Group now boasts nine specialist finance brokers, a financial planner and three support staff. It includes commercial, equipment and residential finance professionals, and its commercial brokers further specialise in industries such as hospitality, childcare, accommodation, management rights, property development and medical and aged care.

Unlike the rest of our top commercial brokers, Green’s loan settlements come mainly from specialised lending. After years of working in banks shaping policy specifically for the hospitality and childcare industries, this has become his “personal specialty”.

“I’ve worked hard over the years to develop my name in this space, working with a diverse range of clients, from small business owners, family-owned local pubs and high-end wine bars to some of Australia’s largest hoteliers, developers and investment groups,” Green says.

Not only was it natural to base his offering on his existing knowledge and experience in this space, but he says the passion in these industries is “contagious”.

“It’s also diverse, from century-old family-owned country pubs to chain hotels, and then of course there are community clubs,” he says.

“When you add in gaming and the intricacies of lending frameworks in this space, and then the strong requirement to improve, expand and upgrade facilities on a fairly regular basis, it means no deal or day is ever the same. It keeps life interesting!”

Green says it has been a challenging couple of years for small businesses, particularly those requiring finance to start up or expand, as increased regulatory requirements have resulted in tightened lending criteria and reduced lending appetites. But in mid to late 2019 many banks shifted focus to small business, and interest rates dropped as competition rose.

While commercial deals are still being done in the COVID-19 environment, Green says “businesses are hurting”. Processes have slowed while lenders prioritise

“The focus here and now is to work with existing clients, to help them manage expenses and keep businesses viable” existing clients; lenders are looking at viability during and post the pandemic, requiring detailed analysis; competition has fallen; and cash flow projections are non-negotiable.

“Phones are running off the hook as clients are trying to grapple with an information overload – what is and isn’t available to them – and we are helping them to navigate best options,” Green says. “The focus here and now is to work with existing clients, to help them manage expenses and keep businesses viable. Our role is to help them understand the current financial relief and stimulus packages available for their specific situation, with the aim of making sure they are well placed on the other side of this event.”

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1/05/2020 11:37:41 12:29:22 4/05/2020 AMAM

SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

3

BEN WARDLEY Making great gains on last year’s numbers, Wardley explains his strategy of developing relationships with the right clients for his business

JUMPING FROM fourth place to third, director of

Total value of loans settled

$263,362,520

Number of commercial loans settled

34

Average commercial loan size

$7,745,956

Years as a commercial broker

16

Aggregator

FAST

48

The Brokerage Ben Wardley wrote $100m more in loans this year than he did last year. As if that wasn’t achievement enough, he did so with a lower number of loans settled, meaning his average loan size was more than three times larger.

He says over the last year some of his key clients have been particularly active, so he was able to complete multiple transactions for those larger connections.

“I’ve always focused on developing relationships with active developers and borrowers who do multiple transactions each year, rather than having a large number of clients that only need finance every year or two. That strategy has been working in recent times,” Wardley says.

He adds that the market conditions have also been fairly strong for commercial brokers who have a client base and connections in the non-bank sector.

“When you look at the turmoil in the banking sector following the banking royal commission and tighter APRA controls, it has actually forced high-quality borrowers to seek funding from non-bank and private lenders,” he says.

While over the last 12 months Wardley has dealt with strong commercial real estate transactions that attracted attention from the major banks, he says trying to settle similar assets in the current environment would be vastly different.

“There are not many asset classes that are unaffected by COVID-19, so I’m sure all brokers and lenders will find it difficult to settle commercial investment transactions in this environment,” he says.

With the pandemic affecting every area of lending, Wardley’s business, which also offers residential loans to provide a full service to clients, is preparing for the challenges of the coming months. Wardley has already seen a large portion of work in progress cancelled or deferred.

“Our first challenge will be to make arrangements with the lenders for any clients that need assistance,” he says. “We have spent a lot of time on that, and I’m sure

“Be in it for the long term; it takes years to develop relationships in commercial lending so make sure you stay committed” most of our clients will be able to get through this difficult period. As a business we really want to maintain our team (our biggest asset) and ensure we are in a strong position when the economy begins to recover.”

Brokers looking to expand into commercial should set goals around what they want their client base to look like in one to three years’ time, Wardley says, and targeting specific groups and industries that will help them find those clients.

“Be in it for the long term,” he adds. “It takes years to develop relationships in commercial lending, so make sure you stay committed to allow that to happen.”

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4/05/2020 1:44:02 PM

SPONSORED BY

JEAN-PIERRE GORTAN As the lending landscape changes, Gortan is prepared not only for difficult deals but also to support people's mental health

SIMPLICITY LOANS AND ADVISORY was established in 2017 with a view to specialising in all aspects of commercial, construction and private finance. With 15 staff, the majority working in the back office, managing director Jean-Pierre Gortan wrote the majority of his loans in commercial property and development finance last year.

He says his success in writing more than $381m in commercial loans is due to tenacity and experience, and never wanting to let a client down, as well as to the group’s internal processes and excellent staff.

Commercial property and development finance are where he has the most expertise, Gortan says, but the market is particularly “dynamic and turbulent” at the moment; lenders are scaling back LVRs, increasing presale coverage, “or worse, just putting their hands in their pockets”.

He adds that the most difficult thing he has to deal with right now is lenders pulling approvals for already-committed deals.

“Deals that two months ago you would have had three or four options, now you might not have any.

Relationships with your lenders are now more important than ever,” Gortan says.

Looking to the next few months, he expects continuing problems with lenders not lending, significant pressure on all business working capital, and reduced activity in all markets.

Before the current situation, however, Gortan says the major banks were coming back to the table for quality clients and the right projects, and pricing from the private and non-bank lenders was reducing significantly. Now, as the world runs a little differently, Gortan and other brokers are having to adjust the way they interact with clients. He says this makes things difficult because being face-to-face helps with engagement and trust.

To prepare for the ongoing challenges, Gortan has invested in areas such as lead generation, IT and services so the office can work remotely and train staff.

One area Gortan wants to focus on is mental health.

2

Total value of loans settled

$381,024,605

Number of commercial loans settled

52

“Deals that two months ago you would have had three or four options, now you might not have any” As the next few months will undoubtedly bring lending and economic challenges, he expects a prevalence of trauma among staff and clients. “[We have] established a number of communication channels for our staff and clients to speak to trained mental health professionals,” he says.

Gortan says that, for a commercial broker looking to grow and expand a business, it is important to invest in yourself, adding that it is your knowledge that sets you apart from others. He also advises brokers to “be good at saying no”, rather than trying to invest in every deal.

“You will save yourself lots of time and heartache,” he explains.

Finally, he says new-to-commercial brokers should start with the basics and partner with someone they can trust for the more complex deals.

Average commercial loan size

$7,327,396

Years as a commercial broker

9

Aggregator

FAST

www.mpamagazine.com.au

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4/05/2020 11:38:24 AM

SPONSORED BY

SPECIAL REPORT

TOP 10 COMMERCIAL BROKERS

ADRIAN LEE Australia’s top commercial broker measures his success on client satisfaction, and with the COVID-19 pandemic creating challenges this has never been more important THE TOP commercial broker this year wrote almost

Total value of loans settled

$454,000,000

Number of commercial loans settled

34

Average commercial loan size

$13,352,941

Years as a commercial broker

7

Aggregator

Finsure 50

double the value of loans that last year’s winner did.

New to the listing, Catalyst Debt Capital managing director Adrian Lee wrote 60% of his loans in development finance and the remaining 40% in commercial property.

The brokerage specialises in these areas but goes above and beyond to provide a “full service”, from appointing consultants through to the negotiation of finance documents and working with the borrower until the facility is repaid or refinanced.

Lee prides himself on partnering with his clients and lenders, and this is what he puts his success down to.

“We get the best results for our clients because we are clear about what the realistic outcome is, and often overachieve because of our strong relationships with our lenders based on credibility and trust,” he says.

Lee began broking after 12 years working in property finance, looking after groups ranging from smaller developers all the way through to listed institutions. He says broking attracted him because it allowed him to give broader advice that was not limited to a single debt solution or a narrow panel of lenders.

Looking at the construction space at the moment, Lee says that, in short, it is “confusing”.

“It’s too early to say what the medium- and longterm impacts of COVID-19 will be on the sector, as well as the broader economy,” he explains.

He adds that the uncertainty has resulted in lenders taking a more conservative approach, and many private lenders that usually fill the gap

have pulled out of the space for the time being.

“Most lenders will now take a full belts-and-braces approach to security requirements and loan conditions, which makes it restrictive in terms of commencing project funding,” Lee says.

The commercial real estate space is also challenging.

Lee says liquidity will be a continuing problem and will have a material impact on values. He adds that investors and landlords will need to be proactive in managing their tenants and accept that “short-term pain will result in long-term gain”.

Before the pandemic, he says banks were opening up to commercial funding and there was increased appetite from non-bank lenders, driven by the lower cost of funds and investor appetite both domestically and offshore.

Moving forward, however, Lee expects to see continued uncertainty. He says lenders are still unsure of their appetite as investors may withdraw from the market and many borrowers are putting their projects on hold.

“Transactions which were considered vanilla not long ago will be incredibly challenging to fund,” he says. “We need to face into that and be there for clients to help them navigate this uncertainty.”

As the broking industry faces these challenges, Lee says he is preparing by actively engaging with lenders, borrowers and market experts so he and his team can be fully educated and prepared to continue finding solutions.

“We are making ourselves fully available – while appropriately social distancing – to clients and nonclients alike to see who we can assist,” he says.

“We get the best results for our clients because we are clear about what the realistic outcome is, and often overachieve because of our strong relationships with our lenders”

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4/05/2020 11:39:16 AM

BUSINESS STRATEGY

SUCCESS

Shifting your mindset to success In these uniquely challenging times, there are five ways you can adopt a simple shift in thinking to allow you to triumph, writes Chris Helder

52

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4/05/2020 11:40:45 AM

LIFE IS complicated. In fact, it’s more complicated than everything that society is going through as a result of COVID-19, including the lack of certainty as to what life will look like when we come out the other end. It’s now more important than ever to think usefully.

Here are five tips that can help you do exactly that.

1. Transform bad habits into good Typical motivation speakers tell us to be positive. Our parents told us to try to be

really important and helps get you through this situation.

2. Times are tough, if you let them be Some people would rather subscribe to tough times. These are tough times.

These are unprecedented challenging times.

Some people love to be unhappy and want to stay that way. If this is you, I do have some good news for you. You will have a lot of friends. You will probably have minimal personal success, but on the plus side you will have lots of people to discuss the seriousness

With all that’s been happening recently, if you have been in a rut for the last six days, six weeks or even six months, it’s not positive thinking that’s going to get you out of it. It’s useful thinking positive. Our teachers told us to be positive.

Well, here we go: idea number one – positive thinking doesn’t really work.

I don’t teach positive thinking. I teach this word: useful. With all that’s been happening recently, if you have been in a rut for the last six days, six weeks or even six months, it’s not positive thinking that’s going to get you out of it. It’s useful thinking.

If you feel like you are at ground zero in your life, the question is not, how can you be positive? Rather, you should ask yourself, what is the most useful thing you can do to get from zero to two? What is the most useful action you can take to get from two to five? What about getting from five to eight? To progress, the question is also: what is the most useful thing you should believe about your reality?

This thinking leads you to discover what is

of these tough times with you. Misery does in fact love company.

3. Gratitude leads to greater things Let me ask you: do you spend most of your time thinking about all the things that are wrong, or all the things you have going for you? Do you think about all the things you don’t have, or do you think about all the things you have?

Actually, forget about all the things you have. Some people right now may not feel like they have that much. That’s not actually what is really important. Instead, do you think about all the things you don’t have, or do you think about all the opportunities that could be coming your way? That’s what really matters. It opens up your mind to new possibilities.

4. Your body reflects your mind One thing that can help us all is called the Mind-Body Loop. Useful beliefs affect the thoughts you have in your mind and change your perception of the world. Those thought patterns and beliefs, in turn, influence your body movement. By the same token, how you move your body affects what you think about. What the mind harbours, the body will manifest.

Healthy people have better posture than sad people. Successful people have better posture than people who feel they are failing.

If you observe someone with excellent posture, you’ll notice that their body language conveys that they are alert and awake. When the body is alert and awake, the mind is alert and awake as well.

5. The first words we say every day It is interesting to look at the words we say to ourselves first thing in the morning to start our day. Do we use words that get us excited about the gift of a new day? Or do we use words that tell us what a grind today is going to be? The most important words we say all day are the words we say to ourselves about ourselves when we are by ourselves. Most people are cruel in those moments. Be nice.

Be the best version of you.

Chris Helder is one of the world’s most outstanding speakers on the topic of communication, leadership and influence.

He is the author of the newly released book The Simple Shift, as well as three other bestselling books: Useful Belief, Cut the Noise and The Ultimate Book of Influence.

www.mpamagazine.com.au

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FEATURES

COVID-19

An essential checklist for COVID-19 Jaquie Scammell provides two checklists of tips for how businesses can be helpful to customers and employees in the difficult environment we face right now AS A business leader, owner or working professional, you are trying to do the best you can right now, and you are probably doing a great job.

You are keeping up with global, national, and local updates. You are learning hourly the impact that COVID-19 is having or will have on your work and economic situation, your personal and professional life. You are seeking ways of feeling good in such dangerous and terrifying times, knowing there is a human need to help each other now more than ever.

So where do you begin to be helpful towards other people, like your valued customers and colleagues? The following two checklists can help.

Customer checklist 1. Be transparent Think about the questions some of your

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customers may have, and anticipate this with a solid list of FAQs. For example, if my yoga studio is now closed, does that mean that as a customer my direct debit payment is paused?

Alleviate any additional stress in their lives by anticipating what they may be asking.

2. Give people options and alternatives Think through scenarios and imagine ways that customers can access your business differently, respecting the social distancing measures in place. Can you provide what you would normally offer face-to-face online? Now is the time to be creative, think differently and set new rules of engagement.

3. Honour any loyalty programs or customer status Proactively communicate what your stance is on customers’ status. For example, Qantas and Virgin last week informed me that they would

honour my current frequent flyer points and put a 12-month extension in place. That’s one less phone call or internet search I have to do, one less thing for me to worry about, thank you very much.

4. Apply standard procedures flexibly ‘Business as usual’ no longer exists; now is the time to be flexible and adapt. What changes have you made to your policies? Have you considered looking at your standard procedures and terms and conditions to suit the times? Aim for a win-win solution that shows people you are being fair and reasonable.

www.mpamagazine.com.au

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2. Overcommunicate your values Remind people of the company’s mission and values, the collective they are a part of. This may even inspire some to think differently about how to achieve those values during times of social distancing. You want them to be advocates of your business when we come out the other end.

3. Be impeccable with your word Choose your words wisely. Slow down on the phone and take a step back in any written communications before you press Send.

Language that is compassionate, helpful and human should be weaved in and out of the facts, tough decisions and clinical responses that may need to be given from time to time.

4. Stay connected

Every time you send out something to your customers, check in to see how helpful you are being 5. Communicate helpful messages – don’t add more noise Every time you send out something to your customers, check in to see how helpful you are being. Yes, thank them for their patience and offer well wishes for their health and safety, but get on with providing solutions, answers and useful suggestions. Empathy is needed, as well as action.

We are social animals that are now being instructed to keep our social distance. The subtle mental and emotional distress that this causes people will have a longer-term impact, and you can be proactive right now by addressing this.

If you haven’t already, set up a series of weekly or fortnightly team webinars where people can come online and connect. This gives people an outlet to talk, share and learn from each other – most of all an outlet to stay connected.

We are experiencing a recalibration of the world right now, and it feels brutal. There will be a new world order. So what matters is what you do right now. The spirit of service is needed like never before.

Colleague checklist 1. Be transparent A great way to communicate facts and make sure employees are not confused is to explain ‘what this is’ and ‘what this is not’. When you spell out what is happening versus what people believe is happening, you can eliminate misunderstandings, rumours and assumptions.

Jaquie Scammell is a sought-after speaker, facilitator and coach who works with some of the largest global workforces in retail, banking and hospitality. Jaquie has managed and advised workforces of all sizes, from small teams to staff of more than 9,500, interacting with millions of fans on a daily basis.

www.mpamagazine.com.au

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PEOPLE

OTHER LIFE

2003

Year Lachlan Mirams began playing Under 10s football

TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com

7

Number of games Mirams played for Victorian Football League

3

Nights a week Mirams had to train

“I actually support North Melbourne, so being a ble to play for my clu b in the VFL a nd create friendships with a lot of the AFL players was something I will always be grateful for”

KICKING FOR GOALS Taking on broking may have left him less time for footy, but Lachlan Mirams still loves playing the sport with friends WHILE SPORT has taken a step back thanks to the coronavirus pandemic, it has been an important part of one broker’s life for the last 17 years. Back in 2003, Intuitive Finance broker Lachlan Mirams began playing football as a junior in the Under 10s and has been involved in the game ever since.

In late 2017 he received a call from North Melbourne inviting him to try out for the newly formed Victorian Football League (VFL) team for the 2018 season. He was offered a contract and played five games in his first season, kicking three goals against Frankston in his second game.

Last year, Mirams was offered his position again in the second season and played another two games.

“While it was a tougher year, being able to play round one as the number one ruckman was still a real highlight and made the long pre-season and practice matches worthwhile,” he says.

Once Mirams started broking and client meetings took up more of his time, he decided to step back from the VFL, but he continues to play football locally with some schoolmates.

“What I love most about football is the competitiveness and getting to go out and battle every week with some of your great mates,” he says.

“The comradery and culture of a footy club is also what I love – getting to be in an environment where you train and play footy while having a great time with mates.”

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www.mpamagazine.com.au

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4/05/2020 3:14:24 PM

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