SMEs turning to commercial brokers for financing

More SMEs are turning to commercial brokers for their financing needs, with new research revealing that aggregators transacted an average of 22,638 of deals below $1 million in 2019 and an average volume of 8155 in commercial deals in 2018/2019.

The Aggregator Benchmark Report, complied by the Commercial & Asset Finance Brokers Association of Australia Limited (CAFBA), showed that brokers helped SMEs access over 89,000 commercial loans and more than 199,000 commercial asset loans in the same period.

A total of 11 aggregators participated in the research, representing 11,490 individual commercial brokers and around 300,000 individual finance deals. The research also represents the first empirical data set available for commercial finance aggregation and is envisioned to be an annual barometer of both commercial finance broker scale and market sentiment.

“Until now there has been a distinct lack of quality data on the commercial broking sector – despite its growing presence in Australian markets,” CAFBA President David Gandolfo said. “It’s fascinating to see the growing appetite for private funders, which are becoming an avenue of choice for many broker businesses. This could be a result of the wider acceptance of using brokers for commercial and residential loans and the diversification of residential brokers into the commercial market.”

CAFBA CEO David Gill said that the report highlights the fact that SMEs value the professional advice, market coverage and ability to arrange finance quickly that brokers can offer. Gill said that SMEs are increasingly developing relationships with brokers rather than with individual lenders – a fact underlined by analysis commissioned by CAFBA in February this year revealing that 72.9 per cent of new commercial asset finance transactions are settled through commercial brokers, up from 67 per cent in 2017 .

“As accessing finance becomes more difficult, brokers are best placed to present a range of options that meet business needs and structure more complex deals appropriately,” Gandolfo said. “As well as simplifying the application process for clients, they reduce the risk of error, which speeds up approvals.

“Many brokers are also small-business owners themselves, so they have a unique understanding of their clients’ needs – and look for opportunities to create strong and enduring partnerships with them.”

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