A Sydney brokerage prides itself on being the home of lending for business owners, self-employed customers and SMEs.
Marillion Financial Services finance manager Chanel Sahyoun (pictured above) said she and her team work closely with new and existing business clients to help them achieve their monetary goals and ambitions.
“These can be things such as using the equity in an owner-occupied property for the business owners company purchases, business lending, an expansion of a company or purchasing company equipment,” Sahyoun said. “It is important to understand a business’s finances, how the business is set up, looking at their financial reports, etc.”
Sahyoun has worked in finance for nearly 10 years, including four years as a banker with CBA and more recently as a loan writer. She said she loved the fact that no two days were the same and she and her team thrived off the opportunity to test themselves daily.
Broker clients seeking reductions on interest rates
“With interest rate rises ongoing, we are reaching out to many of our client’s lenders to see if they can offer a rate reduction. If the lender is unable to, I look at the possibility of refinancing,” she said.
“We are fielding many enquiries on rate reductions from our clients who are feeling the pinch of consecutive rate rises. Many are wanting to fix for one year just to have some certainty. I’ll provide comparisons of options including fixing for one year, variable for one year, or a portion of the loan at a fixed rate and a portion of the loan at a variable rate.”
Interest rate rises affecting loan serviceability
Sahyoun said the ongoing interest rate rises were affecting her clients’ serviceability.
“Many lenders are OK with refinancing at a lower rate, but servicing is tight right now. Some clients might need to close existing liabilities to put a refinance deal through, meaning they might be sacrificing now for short-term financial pain for potential long-term financial gain,” she said.
“This can include things such as closing a credit card or a car loan if possible.”
Sahyoun said many of her new clients who have applied for business finance were concerned as rates continued rising.
“I make sure I am upfront with all new clients as rates from the lender have increased during the loan application period,” she said.
“When I receive a loan application approval from a lender, I prepare the client that this is the current interest rate, however I anticipate it might go up in the short term and they should be prepared. It is so important to check your clients servicing now, then at a percentage higher and advise what their potential repayments might be.”
Clients put loan applications on hold
Sahyoun said she had seen an increasing trend of new clients choosing to hold off and wait for the volatility of the interest rate rises to be over.
“We have seen many clients who obtained pre-approval who decided they did not want to proceed because there was too much unknown at the time,” she said.
“People with tight budgets and who are navigating the cost of living go up as their wages might not, makes it hard for many. The unknown is scary and as finance professionals, we need to ensure we structure our clients loans the best we can to help them avoid additional costs. It is always a case-by-case basis as each person’s circumstances are different.”
Interest rate rises are clearly having an effect on the market, with the Australian Bureau of Statistics (ABS) revealing on January 13 the value of owner-occupied refinancing between lenders had risen to a new high of 9.1%, with an increase of $13.4 billion in November 2022. Meanwhile, total new loan commitments for housing fell 3.7%.
Meanwhile, Roberto Sanz, national sales manager at non-bank lender Prospa, said diversifying into commercial lending was paying dividends for many brokers.
“Brokers will be pleased to learn that demand for commercial lending remains strong despite the challenges of the current market, with rising interest rates, inflation and increased operating costs,” Sanz said.
“Commercial lending offers a valuable opportunity to not only grow your business and earn a new income stream, but also to create stickier relationships with your clients as you can support them through multiple scenarios.”
Are you a business owner who is struggling with lending or serviceability? Let us know in the comments below.
