Finance brokers are replacing the role of the bank manager in their ability to build relationships with small business customers and meet their evolving funding requirements.
That’s according to Scottish Pacific CEO Peter Langham, who says that small business customers are increasingly turning to alternative funders, non-bank lenders and brokers for their financial needs.
Scottish Pacific’s September 2017 SME Growth Index found that the number of SMEs funding growth via their main relationship bank continued to trend down (from 38 percent to 27 percent) while the popularity of non-banks had grown (from 10 percent to 22 percent since the index started tracking sentiment in 2014).
“One of the main takeaways for me was that there was a steady move from traditional bank lending to non-bank lending, and that is telling me that SMEs are more aware of the alternatives that are out there,” Mr Langham said.
“With an almost 10 percent jump in the number of growth SMEs citing cash flow as a key barrier to business growth and the increase in those planning to fund expansion plans via non-bank lending, the time is right for those who can step up and offer fast and effective growth funding for the SME sector.
“I see finance brokers as the old bank manager, where the bank manager understood your business and worked with you to get the outcome you want and the brokers fill that role.”
Scottish Pacific will be hosting a masterclass on debtor finance at The Adviser’s Bootcamp SME Broker events this month.
In the session, brokers will learn the key cash drivers in a business, understand the working capital cycle and review practical applications of debtor finance through real-life case studies.
This event is designed to equip brokers with the skills and knowledge required to begin targeting SME clients and expanding their own businesses.
The event kicks off in Sydney on 14 November, before heading to Melbourne on 15 November, Brisbane on the 23rd and Perth on the 28th. It will be hosted by James Mitchell, managing editor of mortgages at Momentum Media.
“Over the last 12 months, there has been a significant shift among mortgage brokers towards small business finance,” Mr Mitchell said.
“This was evident in The Adviser’s Elite Business Writers ranking for 2017, which showed a big increase in volumes other than residential mortgages among the top 25 brokers in the country.
Terry, your friendly mortgage broker