The opportunities of branching out

Suncorp's education program gives brokers the skills, tools and confidence they need to become an SME customer's main point person

While access to finance has improved for SME's since the GFC, not all of these two million businesses think to go to their mortgage broker first for help in finding the best credit solution for their company.

Suncorp is trying to change this. Through its extensive education program and team of seven dedicated SME BDMs on the eastern seaboard, the lender is giving brokers the skills, tools and confidence to become an SME customer's main point person. 

With about 30% of Suncorp's existing home loan customer base also being small business owners, Robynne Frost, national manager for small business and commercial, says brokers already have an upper hand. Not to mention the fact that most brokers are small businesses themselves and can relate to their SME customers' challenges.

Instead of letting those clients walk out the door, Frost is on a mission to help brokers diversify so they can capture and convert those leads. 

“Our education program is representative of our commitment to the broker market and the opportunity that SME lending provides our broker partners,” she says.

It all began two and a half years ago when Suncorp recognised the trends pointing to continued strong growth in the small business sector in Australia, and the opportunities therein for brokers. As an industry leader, the bank established a dedicated channel for small business and commercial lending through intermediaries.

The projection was not wrong. The small business sector in Australia continues to thrive. In February 2017, the ABS reported that the number of active businesses in Australia had increased for the third year in a row, primarily driven by growth in small businesses, which now total two million.

With that many businesses in the market potentially looking for finance at some point, it’s clear that brokers will need to do more than just write mortgages if they want to remain relevant and competitive.

While many brokers have embraced SME lending, the majority still haven’t seized on this lucrative income stream, Frost says. The MFAA’s latest Industry Intelligence Service (IIS) report found that only 2,650 brokers out of 16,000 wrote a commercial loan in the period October 2016 to March 2017.

So what's stopping brokers from branching out? Some brokers think it's more significant a step than it actually is, Frost says.

"Small business people are busy and time-poor, so what they need is a trusted adviser to help them navigate their way through their lending requirements," she says. "There is a very real opportunity for brokers to meet this need, and we can support them in doing this."

Suncorp has responded to this worry by becoming a leader in education in order to remove barriers to entry and dispel some of the misconceptions brokers have about SME lending. 

On the back of its very successful three-hour intensive SME masterclass program that saw 1,200 brokers attend last year, Suncorp has begun offering two new educational programs this year that will be more intimate in scale.

The small-session intensives will run over the next six to 12 months in Sydney, Brisbane and Melbourne. The Business Essentials Program will enable brokers to learn more about Suncorp’s products, policies and processes, and the serviceability requirements needed to get small business loans across the line.

“SMEs are looking for a trusted adviser who is knowledgeable, understands their needs and can provide the assistance they need to meet their financial requirements. Our team can help brokers deliver in this market” - Robynne Frost, Suncorp

The Bridging the Gap program is a more advanced course in which the group will go through two case studies from beginning to end so brokers can see the mechanics of the deal and gain a strong understanding of how to put one together themselves.

Frost points out, however, that not all SME lending transactions are overly complicated. One of Suncorp’s key offerings for small businesses is a loan that goes up to $1m and has a familiar feel to a home loan. It’s a secured product that is not for cash flow lending, so it’s an easy first step for brokers looking to try their hand at writing this type of transaction.

In addition to its educational programs, Suncorp has also built a small business hub within its broker portal that is a repository of extended learning resources, tips and guides to improve brokers’ fi nancial knowledge and the conversations they’re having with SME customers.

No time like the present

Across the industry, a lot of lenders are talking about diversifi cation. It’s easy to tell brokers to change and adapt, but it’s another thing to actually support and guide them through it like Suncorp is doing.

While brokers do need the skills and understanding of financials to effectively complete SME deals, Frost says it’s not just about knowing the numbers. It’s also about understanding the dynamics and the unique needs of these customers. Starting in March, Suncorp will be sharing its research and insights into this area with its broker partners in a new newsletter dedicated to commercial and small business lending.

The MFAA IIS report showed that the number of brokers in Australia recently increased by more than 3%, outpacing the value of new home loans being written.

Instead of seeing this as a warning sign, brokers should see it as the encouragement they need to shed the ‘mortgage broker’ moniker and become multifaceted finance brokers who can meet the changing needs of an increasingly diverse range of clients.

“Ultimately, SMEs are looking for a trusted adviser who is knowledgeable, understands their needs, and can provide the assistance they need to meet their financial requirements. Our team can help brokers deliver in this market.”