Business lenders finding their niche with far quicker turnaround times

As outlined in Agile Market Intelligence’s latest Broker Pulse: Commercial Lending survey, in partnership with the Commercial & Asset Finance Brokers Association (CAFBA), non-bank business lenders boasted impressive turnaround times for business loans over October, with an average of just 1.5 days.

When compared next to the major banks, this climbed to 7.5 days for the same period. Meanwhile, business banks had turnarounds of 5.8 days and non-banks of 4.9 days.

These results drive home the value of specialised lending. Choice is always a plus for both borrowers and brokers.

According to Agile Market Intelligence director Michael Johnson, tech is a major contributor to the success of these lenders, allowing for streamlined settlements.

“The fintech-style business lenders are recognised as being able to fund SMEs extremely quickly compared to their business bank counterparts. Their use of intuitive online applications and bank statement analyses are invaluable for clients looking for funding fast,” said Johnson.

“Brokers benefit from having these different types of lenders on their panel so they can trade-off three core elements of commercial lending – speed, policy-fit and interest rates. Ultimately, it’s great to see so much choice for SMEs to access funding that suits their needs.”

A recent Broker Daily article analysed the importance of choice for the lending industry. Non-banks pave the way for increased competition among lenders, which in turn creates more choice for borrowers and brokers, resulting in better offerings.

Firstmac’s chief financial officer, James Austin, said: “The non-banks provide that diversity of funding and ultimately create the competitive markets that allow the broker and third-party market to thrive.

“I think it’s probably fair to say that most brokers would have a natural suspicion of the banks and that the banks would like to take distribution back in house if they could. And certainly, they’ve got different retail channels attempting to do just that. So, the presence of an active non-bank market is quite crucial for third party distribution.

“Non-banks, and particularly the bigger five non-banks, have to compete with banks where [they] either cannot compete or will not compete. So often that’s driven by capital guidelines.”

The commercial mortgages space had less disparity in turnaround times. According to Agile Market Intelligence’s survey, the majors saw average turnarounds of 7.3 days over October. For business banks, it was 7.4 days and non-banks 6.6 days.

With far more hoops to jump through when securing a commercial mortgage, these results are unsurprising, said Johnson.

“There’s less turnaround time variance between these lenders in commercial mortgages due to the complexity and depth of requirements for these loans,” said Johnson.

Asset finance, on the other hand, saw far quicker turnarounds across the board. Major business banks saw 1.6 days on average. Business banks saw 2.7 days, non-banks 1.7 days, and non-bank business lenders 1.2 days.

[Related: Without non-bank lenders, the loan market would be a different beast]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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