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Commercial broking is as much a business strategy as it is a skill set, writes Chris Thomas, executive commercial broker and equipment finance sales at NAB

THE PHENOMENAL rise in commercial broking has reinvigorated the industry, seeing thousands of mortgage brokers upskill and diversify to create stronger businesses and better service clients.

NAB Broker Distribution is dedicated to helping brokers deliver the best customer outcomes, supported by a national network of experienced BDMs and dedicated support through every stage of a customer’s lending experience. As the Bank behind Brokers, we will continue to invest in the broker channel to provide brokers the tools and support they need to help their customers, empowering them to build success on their own terms.

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“Commercial clients, on average, will have three separate business finance needs per year”

Chris Thomas, NAB

According to the MFAA, more than 6,100 mortgage brokers were writing commercial loans heading into 2023. That was an increase of 16.1% year-on-year and means almost one in every three (31.8% of) mortgage brokers now write commercial loans. Both new and existing commercial brokers recognise the opportunity before them. Australia is a growing and entrepreneurial country with almost 2.5 million small-to-medium enterprises, according to the Australian Small Business and Family Enterprise Ombudsman. These SMEs are spread across different industries and range greatly in size, each with unique business plans to finance and execute. In short, millions of small businesses are going to need the support of commercial brokers and our industry well into the future.

“Industry trends and the vital relationships between banker and broker have driven our focus on broker education for the year ahead”

Chris Thomas, NAB

Brokers, by the nature of their businesses, have large and various contact points in their communities, ranging from microbusinesses (or side hustles) to generational businesses with large, complex operational structures that create significant prosperity and wealth. The challenge is that commercial broking is a different skill set to mortgage broking. Commercial clients, on average, will have three separate business finance needs a year. In contrast, home mortgages are typically reviewed only once every two to three years. This extra client care can create new and interesting challenges for brokerages wishing to expand, especially as they attempt to balance winning new business with servicing existing clients. The increased demand in brokerages for commercial loans also sets up the challenge of capacity, and brokers tackle this in many ways.

Some build commercial broking capacity by upskilling staff and investing in education. Others look to bring on new staff members with the experience to immediately hit the ground running, such as a former business banker. Businesses whose strategy doesn’t include building a commercial broking capability may engage their aggregator and connect with other brokerages in the aggregation group that specialise in supporting business clients as part of a referral program.

Regardless of your approach as a broker, the underlying principle is that you will meet business clients or self-employed clients, and it is critical to provide additional services that ultimately help them. Whichever path you choose, NAB is passionate about providing broker and business client solutions, and we’ve mirrored our commercial broking and banking teams to help solve the challenges that brokers face.

“Commercial clients, on average, will have three separate business finance needs per year”

“Industry trends and the vital relationships between banker and broker have driven our focus on broker education for the year ahead”

“Commercial clients, on average, will have three separate business finance needs per year”

“Industry trends and the vital relationships between banker and broker have driven our focus on broker education for the year ahead”

Commercial broking is as much a business strategy as it is a skill set, writes Chris Thomas, executive commercial broker and equipment finance sales at NAB

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Published 14 Nov 2023

Number of mortgage brokers also writing commercial loans

7,000

6,000

5,000

4,000

3,000

2,000

1,000

Apr17- Sep17

Oct17- Mar18

Apr18-Sep18

Oct18- Mar19

Apr19- Sep19

Oct19- Mar20

Apr20- Sep20

Oct20- Mar21

Apr21- Sep21

Oct21- Mar22

Apr22- Sep22

2,932

3,668

3,617

3,481

3,670

4,486

4,539

4,727

5,268

5,396

6,118

Note: Commercial brokers as those mortgage brokers who had written a commercial loan through their aggregator's panel for the period. Mortgage brokers who solely wrote loans direct with lenders are not included.

Source: MFAA Industry Intelligence Service 15th Edition

The traditional entry path into commercial broking was for ex-commercial bankers to leave their roles to start their own broking businesses from the ground up. This is a valid approach, but more and more we’re seeing industry consolidation with new partnerships and acquisitions. It’s becoming increasingly compelling for ex-bankers to join larger brokerages to have a bigger support team and boost their capacity. Recognising these industry trends and the vital relationships between banker and broker has driven our focus on broker education for the year ahead. With highly skilled bankers and credit specialist teams placed across Australia, we deeply understand the industries and complex financial solutions that you and your customers experience. In 2023, our face-to-face broker credit workshops evolved into a series of training programs that we piloted across several aggregators. And following the successful pilot program, we will roll out these training programs across aggregators in 2024, with additional learning resources to appear on aggregators’ digital platforms.

What has worked well in the credit workshops is NAB’s ability to provide timely, real-life examples and role-play scenarios from our client base. Brokers develop financial risk and credit assessment skills that allow them to successfully:

examine business cash flow statements and understand a borrower’s ability to generate sufficient cash flow to meet their obligations discuss financial performance and cash flow position with clients structure and present concise, insightful financial analysis commentary to support an NAB credit submission, and ensure a faster turnaround

Specialist workshops will cover topics such as trade working capital (TWC), commercial real estate (CRE) and industry-specific credit policies, while other tools and resources help to further develop commercial lending and credit-writing capabilities. In addition, we’ve enhanced our broker portal with deal structuring questionnaires relevant to specific industries. Brokers can also access our communications on operational and credit policy, as well as thought leadership content, NAB business surveys and economic webinars.

Finding the right partner

In our 12 years offering commercial broking solutions, we’ve seen some incredible success stories, such as brokerages that have gone from less than five people to more than 100. On every occasion, success has been built on a core ethos of service – brokers having a well-defined customer value proposition and being clear on how their service proposition marries up with it. This includes upskilling, recruiting the right people to grow with the business, understanding the broker to banker relationships, post-settlement support, investment in technology and building gradual scale.

As more borrowers choose brokers, NAB is ready to be part of the solution. We drive innovation where we can add the most value for clients. We pride ourselves on our responsiveness and service – and our ability to work with brokers and their customers to ensure they achieve their goals and get to where they want to go.

Chris Thomas

Executive commercial broker and equipment finance sales, NAB

Chris Thomas was appointed as executive, NAB Commercial Broker & Equipment Finance, in 2021. Since joining NAB in 1988, Thomas has held several front-line senior leadership roles within the bank’s Business and Corporate Banking divisions. In 2013, he established the Commercial Broker division, in which he leads a team of highly professional business bankers who work to build strong relationships with the broker market to ultimately help SMEs in Australia grow and prosper.

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Chris Thomas, NAB

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E-newsletter

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Resources

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Power Panel

Independent Feature

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Business Focus

Big Deal

Premium Content

Technology

Reverse Mortgages

Investment Loans

Specialist Lending

SME

Commercial

Specialty

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