In the aftermath of the Royal Commission into banking misconduct, securing a business loan is becoming more challenging.
In its submissions to the Royal Commission, the Australian Prudential Regulation Authority (APRA) made it clear that it expects bank loan calculations to better reflect the borrowing power of applicants. An expected consequence of this is a more risk-averse attitude from lenders, and subsequently, a declining trend in both loan approval rates and loan value.
Indeed, a poll commissioned by Atricity Finance revealed that 92 per cent of respondents believed that SME finance was “more difficult” to obtain since the final report was released.
SMEs can also face more hoops and hurdles as they navigate the increasingly strict and complex lending application process. This means more criteria to satisfy, more paperwork and more interrogation.
As a result, many SMEs are opting to leverage the expertise of brokers in their bid to secure much-needed finance.
Here we outline three reasons why consulting a commercial broker may be a wise choice in the current climate.
There’s far more to understand about business lending than just interest rates, and an experienced broker can provide detailed information about the features and criteria of each financier and product that exists in the marketplace.
For example, some lenders exclude certain industries, have strict criteria around the balance sheet, or demand a director’s personal property as security. These can be important factors in your decision-making process.
Being walked through each product and associated criteria, step-by-step, will ensure you make a more informed choice.
Brokers take time to fully understand your needs and measure up your specific circumstances against the full range of lenders in the marketplace.
Our securitisation software actually takes that one step further, enabling brokers to get an even clearer picture of your borrowing power – based on how much you are owed from your unpaid invoices (rather than just your existing cashflow or property assets).
Given that the research shows SME cashflow is “definitely more” of a problem than it was twelve months ago, this could make or break the success of your application.
With an accurate knowledge of their security position, the broker can access larger pools of capital with confidence; and recommend loans and providers with whom you will have the strongest chance of success.
Moreover, by securitising your accounts receivables via the broker channel, you won’t need your property as collateral.
By applying directly with a bank, you will limit your loan and security options significantly. However, researching the full range of providers, and attending appointments for each, would require a substantial investment of your time.
By acting as a single touchpoint for multiple lenders, brokers can help you save time, giving you the freedom to do what you do best – deliver your products and services with full commitment and passion.
More often than not, brokers don’t charge a fee for their service either. They are reimbursed through commissions once the loan is settled. And this will only happen if it’s the right loan for you, based on your borrowing power.
TP24 offers a unique solution for SMEs in Australia. We provide a line of credit working in harmony with your software. Secure, flexible credit with limited admin. Get in touch today email@example.com.