Residential mortgage brokers are being encouraged to look beyond home loans, with SME finance emerging as a key opportunity for growth.
Speaking on Broker Daily’s Finance Specialist podcast, Accendo Financial founder Trent Carter said brokers looking to enter the SME market should resist the temptation to become experts in every area of commercial finance from day one.
Instead, Carter argued that brokers should focus on a specific niche, build experience gradually and leverage the relationships they already have.
“I would say first of all tackle an area that you think you can get some traction in so you get some deal flow,” Carter said.
“Because the most important thing is whatever skill you’re honing, you want to use repeatedly.”
Business finance has been flagged as a key area for growth, particularly as market share in residential mortgages becomes increasingly saturated.
According to Carter, one of the biggest mistakes that brokers make when entering SME finance is attempting to offer every type of commercial lending service at once.
“I think the brokers that fail in this are the ones that say they can do it all,” he said.
“Just because they’ve got the qualification potentially to do it all doesn’t mean that they have the ability to do it all.”
Slow down to speed up
Rather than chasing new leads, Carter said many brokers already have opportunities sitting within their existing client base, particularly among self-employed borrowers and business owners.
“Now you’ve got the opportunity for a portion of these clients are going to be self employed themselves and property investors,” he said.
“What I’d love to do now is talk to you about how you’re funding your business and the opportunities that I’ve got to be able to assist you in the same way that I’ve been able to successfully help you in terms of your residential business.”
Carter said this approach also allows brokers to build confidence and experience at a manageable pace.
“I think that opportunity to work with your existing self employed clients over a slower base and offer a review service is a great place to start,” he said.
Building credibility
Carter highlighted the importance of relationship building, identifying accountants as one of the most valuable referral partners for brokers entering the SME space.
However, he cautioned against relying on cold outreach, instead encouraging brokers to use existing client relationships to create warm introductions.
When it comes to working with business owners, Carter said curiosity and a willingness to ask questions are often more valuable than trying to project expertise.
“Don’t pretend you know everything just because you’ve started calling yourself a commercial broker or a business broker,” he said.
“Just have a little bit of humble pie.”
“I’d love you to treat me like an idiot and assume that I know nothing about your business. Can you just walk me through it? And I’m going to ask some really simple questions and I hope you don’t mind.”
Ultimately, Carter said brokers looking to build a successful SME finance business should focus on understanding clients first and expanding their expertise over time.
“So be slow, target the areas you want to actually build in and start to really unpack what it means to do commercial property, for example, as the first string in your bow and then add slowly after that.”
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