iscover 
Speaking to Broker Daily, Brent Starrenburg said that Connective’s network has seen volumes broadly tracking in line with last year, following a period of strong growth, even as businesses face rising costs and weaker sentiment.
While Starrenburg noted that current conditions are placing some businesses under pressure, he said the financial context is changing how and why businesses are accessing finance, creating opportunities for a more complex, advisory-led approach among brokers.
SME lending demand holds as focus shifts to cash flow
Starrenburg said that commercial lending volumes have remained steady, even as SMEs contend with higher interest rates, rising input costs, and weaker consumer sentiment.
Sectors exposed to fuel, transport, and logistics costs are among the hardest hit, with cost increases flowing through supply chains. At the same time, pockets of strength remain, including SMSF lending and development finance, although borrowers are becoming more selective.
“There’s pockets of commercial that are doing very well, and then there’s obviously pockets that are doing not so well,” he said.
“Anyone in the transportation sector is definitely feeling it more than most at the moment. The challenge is that it’s not just the immediate pressure of fuel costs, but everything that flows on from that.”
He also noted that other pressures, such as Payday Super changes, would also place additional strain on SMEs.
“If businesses aren’t thinking about it, they definitely need to be because if you haven’t got that cash there, it’s going to put all sorts of pressure on that business,” he said.
Starrenburg noted that Connective has seen the composition of demand shifting. Rather than borrowing to expand, businesses are increasingly seeking funding to manage liquidity and absorb cost pressures.
“We’re seeing more cash flow lending,” he said and pointed to growing use of working capital facilities, second mortgages, and debtor finance.
“We’re also seeing rising use of private credit. We’ve recently added several lenders to our panel that we believe are the right fit for brokers, and we’re seeing solid demand for them due to their speed.”
Starrenburg added that broader household pressures are also influencing SME behaviour, with many business owners balancing personal financial strain alongside business decisions.
“What people forget is that SMEs are made up of mum-and-dad operators who are dealing with their own mortgages and cost-of-living pressures,” he said.
“That impacts how they run their business.”
Starrenburg also noted that uncertainty has weighed on confidence. According to a recent survey from National Australia Bank, business confidence has plunged despite overall business conditions remaining fairly resilient.
“There’s probably a level of cautiousness in how businesses are operating,” he said.
“They’re probably being a little bit more strategic in the way that they do things.”
But I think that confidence comes from knowing. The big challenge is none of us know how long this is going to last.”
Tough times create stronger partnerships
As SME needs become more complex, Starrenburg said brokers have an opportunity to go beyond traditional transactional roles, with a stronger emphasis on advisory.
Starrenburg said that starts with regularly checking in with clients.
“I think the first thing they should be doing is looking at all their customers that they have currently on their books and actually having the conversation and just asking them how they are going from a business perspective,” he said.
This includes helping clients manage cash flow, identifying risks early, and structuring appropriate funding, often across a mix of lenders.
The growing role of private credit is one example, with non-bank lenders increasingly used for speed or flexibility. However, Starrenburg said that such facilities should generally be used as short-term solutions.
“There’s an increasing place for it, but you need a clear exit strategy,” he said.
“Again, that comes down to knowing your client and having the strategy in place.”
He also stressed the importance of transparency in lender conversations, particularly where businesses may be under pressure.
“You’re better off being upfront about what’s going on and working through it,” he said.
“Trying to hide something is not going to work in your favour.”
He said brokers who support clients through difficult conditions are likely to build stronger, more enduring relationships than those formed in more favourable times.
“It’s about structure, but also getting a deeper understanding of the client’s business,” he said.
“Nobody wants tough times, but if you can be there, even just as a sounding board, and look at what they’ve got, whether it’s a debt restructure, a cash flow loan, a second mortgage or trade and debtor finance, that’s what builds trust.
“If you can help them now, they’ll trust you moving forward, and that’s where repeat and referral business comes from.
“The smart brokers are having those conversations, getting involved, and taking a more consultative approach as opposed to a transactional one. That’s where the opportunity lies right now.”
[Related: Albanese unveils $1bn interest-free loan package for fuel-hit sectors]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.