Non-banks are playing an increasingly important role in providing commercial and small business loans, with mortgage brokers settling a record $17.2 billion of commercial loans in the six months to September 2022, up 28.6% year-on-year, MFAA data showed.
For mortgage brokers hoping to catch the lending wave, now may be time to do so, given the rise of non-banks, the increasing reliance of brokers on broker advice, and the ample demand for funding in some sectors.
Over the next few months, Grow Finance is expecting demand for overdraft products as well as an ongoing need for working capital to support trade during seasonal periods.
Read more: Shifting sands spur borrowers to tap non-banks
“Businesses are increasingly diversifying their operations and becoming less reliant on import and offshore manufacturing, which continues to drive demand for asset finance,” said David Verschoor and Greg Woszczalski, Grow Finance co-chief executives.
Over the longer term into early 2024, many SMEs will likely experience revenue growth, as they are faring better than expected through this challenging period and as they start to look to the other side of peak interest rates.
According to the latest CreditorWatch Business Risk Index (BRI), the average trade receivables, or the number of open invoices a business has on its books, increased 45% year-on-year in March, driven in part by surging inflation as well as a resumption of “normal” trading activity post-pandemic.
But while it was sectors such as healthcare or trades and services that were currently the most optimistic, research, including by the Australian Banking Association, found that small businesses overall have become much more confident than consumers in general. In the residential space, despite higher interest rates reducing Australians’ borrowing capacity, people were actively exploring alternative avenues.
“We expect more first-home buyers will look to specialist lending solutions to get a foot on the property ladder,” said John Mohnacheff, group sales manager at Liberty. “Liberty’s extensive range of free-thinking loans could support many to enter the market sooner.”
Higher interest rates are also driving refinancing and debt consolidation to help cut overall monthly repayments and simplify outgoings.
“Specialist lending expertise is therefore becoming an essential component of a successful broker business,” Mohnacheff said.
And it’s those brokers who are across the range of products available at non-banks who will be able to ride any lending wave.
Barry Saoud, Pepper Money general manager for mortgages and commercial lending, said brokers are “uniquely placed to offer the broadest range of lending options that a customer may need to find a solution.”
By having access to the diversity and breadth of non-bank options, brokers gain an edge over traditional and direct lenders as they are able to meet the needs of a much broader range of client needs.
“[This] is key to brokers continuing to play an important role in the lending marketplace, enabling diversification and delivering healthy competition for borrowers,” Saoud said.
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