Brokered commercial finance is the industry's fastest-growing segment, though scrutiny over standards of practice is also rising
Diversification is no longer a future consideration, it’s a present-day imperative.
That was the message delivered by Stephen Scahill (pictured), group executive, commercial finance at mortgage aggregator LMG at the 10th annual National Finance Brokers Day.
Addressing an audience of broking industry professionals, Scahill highlighted the remarkable growth in brokered commercial finance in recent years.
“In an industry that has been operating for over 30 years, for the number of brokers writing commercial loans to grow by 24% in a single year is extraordinary,” said Scahill. “This is real momentum and it shows that customers want more from their brokers, not just a home loan.”
Scahill contended that the market has moved past asking why brokers should diversify and is now firmly focused on how.
Read more: Opening a dialogue on commercial lending
“The same clients who trust you with their home loan are making business finance decisions. Often, they just don’t know their broker can help,” said Scahill, suggesting that this presents significant growth opportunities for Australia’s 22,000-plus brokers.
“There’s no reason commercial market share shouldn’t eventually mirror residential,” he added.
Commercial lending: The new frontier
According to recent data from the MFAA, more than 7,000 brokers are now actively writing commercial loans, with the settled value of commercial loans reaching nearly $23 billion (up 31.2% year on year).
In a recent survey, a majority of brokers pointed to increased client demand and long-term sustainability as the main drivers for branching into areas like asset finance, equipment lending, and SME working capital solutions.
With residential lending margins under pressure, the commercial sector offers stronger yields and ongoing relationship-based revenue streams. More importantly, it also allows brokers to deepen client engagement by becoming a one-stop-shop for all funding needs.
LMG, for its part, has sought to capitalise on these shifting broker trends by positioning itself as the home of the diversified broker.
That has involved modernising its MyCRM broking platform to handle all manner of residential and commercial transactions under one roof.
Scahill did not waste the opportunity to tout the benefits of MyCRM at the National Finance Brokers Day, telling the audience: “As a broker, you need a team around you, and we’ve built the largest specialist support team in the country. You need technology, and MyCRM is the only platform that brings resi, commercial and asset finance together in one place.”
He also addressed the misconception that diversification adds pressure to already stretched businesses. “Additional revenue streams can fund support staff or specialists, allowing brokers to scale. With AI doubling in capability every six months, the time savings we’re about to unlock will make diversification even more viable.
“Some commercial transactions are actually quicker and easier than resi,” Scahill said. “It’s about building capability step by step and partnering with trusted specialists for the more complex transactions.”
But while many brokers are jumping on the commercial bandwagon, the all-seeing eye of the regulators is taking a closer look at the inherent risks of brokered commercial finance.
ASIC calls for higher standards in commercial broking
At the recent CAFBA Commercial Finance Summit, Calissa Aldridge, executive director, markets, at the Australian Securities and Investments Commission (ASIC), called on the industry to raise the bar on professional conduct and transparency.
“ASIC is certainly not rushing into new regulation, but we're upping our oversight and we're looking for industry to step up as well,” said Aldridge. “Private markets are growing and they're an important part of our economy and private credit is good for our economy if done well… We need to make sure we continue to get that balance between opportunity and risk.”
Aldridge highlighted that 72% of all new commercial equipment financing is sourced through commercial brokers. “You are in this unique position to help influence and raise standards across the markets and I really encourage you to step up and try to inform the standards,” she told the gathered brokers.
For Scahill, the opportunities outweigh the risks.
“There’s no quieter period coming. Waiting risks lost income and lost customers. Diversification is about future-proofing your business and keeping your clients where they belong, with you,” he said.
