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The latest Broker Pulse: Commercial Lending by Agile Market Intelligence has revealed the turnaround times for a variety of lender categories.
Business loans over the last three months witnessed significantly faster turnaround times for non-bank business lenders compared to the majors.
As of September, the average turnaround time for a business loan with the major banks was 7.5 days. Comparatively, the turnaround time for non-bank business lenders was just two days.
Other lenders saw varied results throughout September. Business bank ADIs had an average turnaround time of 7.4 days, more akin to the majors, and regular non-bank lenders’ was 4.8 days.
It seems having a niche offering allows lenders to work faster in that field. For borrowers, this drives home just how beneficial it can be to visit a specialised lender.
Despite this, people looking for business-related loans still preferred the majors. NAB was the most popular bank for commercial mortgages, ANZ for business loans, and Westpac for asset finance.
However, other non-banks were making waves throughout the month, with banks like La Trobe Financial, Liberty Financial, Judo Bank, Prospa, and Pepper all being popular choices for brokers.
“We have been seeing consistently better time to decision from the non-bank lenders when it comes to business loans, while ANZ and NAB are leading the way in terms of market share, on average, the non-bank lenders are turning these loans around as much as three times faster,” said Agile Market Intelligence commercial director Oliver Stofka.
“The specialisation that non-bank lenders have helped them to focus on more specific scenarios, allowing brokers to have good awareness of where they can help and their policies, helping brokers get these loans to their clients faster.”
According to Jayden Paludan, finance broker at QPF Finance Group, the smaller lenders are able to achieve such quick turnarounds through a mix of excitement and ambition.
“These smaller lenders take every deal they get with pride, when they have any client put an application in it seems like they are honoured to receive an application. To be frank, these smaller lenders don’t get the opportunity of the volume and type of client that the larger lenders garner; so, when they have a lending opportunity, they know they must make the most of it,” said Paludan.
“Providing fast and efficient service is one of the areas they can beat the bigger lenders, so it is something they prioritise to clients and introducing brokers – to win this deal and future business.”
There are a variety of benefits to choosing a small lender over one of the big players. Paludan believes that it’s more rewarding for relationship building to visit a small lender.
“Smaller lenders will often look at the profile and type of deal when assessing an application, often you see larger lenders ‘tick the boxes’ if one box goes unticked it’s unlikely to proceed. Smaller lenders are more willing to investigate the ins and outs of a deal to assess its viability and if it truly suits their lending appetite,” Paludan said.
“These smaller lenders often operate in a specialised area of finance that they view as advantageous. They can narrow their target demographic to fill the need in the market. Sometimes these options are more advantageous for the client if they fit into the smaller lender’s demographic.
“Another benefit is the relationship you can build with smaller lenders. You can tell their prerogative is to build long-term relationships with clients and brokers. So, the ease of building rapport is evident in their service and communication.”
On the broker side of things, partnering with a smaller lender can be equally rewarding. While this may vary from broker to broker, quick turnaround times paired with specialised offerings for borrowers can make for a strong relationship.
“There are some amazing bigger lenders who dominate the space for a reason (price, service, relationship) and brokers like working with these types because they and the client often get the best outcome in the market,” Paludan said.
“However, smaller lenders provide life for clients who are not able to be assessed by bigger lenders giving opportunity to the client and broker. Ultimately, what matters is getting the client the best outcome possible and good brokers will find the most appropriate lender to suit their client’s profile whether they are ‘big’ or ‘small’.”
The Broker Pulse: Commercial Lending is open from the first of every month. If you would like to contribute to this important voice of broker industry program, please visit brokerpulse.com.au
Related: Broker sentiment split among major banks
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