Gaining brokers' trust essential, says business finance expert Ray Esho
ING has been on a bit of a tear of late.
In December, the non-major’s Queensland mortgage business welcomed two business development managers, Mandy Grabovac and Ardele Hammond, to meet growing demand in the sunshine state.
That same month, ING launched a new Green Upgrade Loan product to meet the escalating appetite for sustainable home improvements among mortgage holders across the country.
The fortification of ING’s lending capabilities speaks to the bank’s defiance in the face of what undeniably remains a sluggish time for the property finance market amid disappointing housing approval rates and lingering anxieties around interest rates and the upcoming federal election.
Business lending has also remained resilient at ING, despite macro pressures coming in from all directions.
Speaking with MPA, ING’s national sales manager of SME lending Ray Esho (pictured) discussed how the bank is adapting to the resilient demand for SME lending emerging from the third-party channel.
Streamlining the process
“At ING, we see a significant opportunity to accelerate the growth of our SME portfolio, and as a result, we’re focusing on making it easier to write commercial loans with ING,” said Esho.
He said that ING has recently remapped the lender’s entire sales and origination process “to allow increased broker interactions through the applications process”.
ING has also increased its technology budget to make the origination process more sophisticated yet more streamlined at the same time.
“In the meantime, our assessment turnaround times have remained unchanged despite a significant increase in the number of loan applications we processed during the second half of 2024,” said Esho.
ING recently made the decision to increase its loan-to-value (LVR) ratios across all commercial property products; a move which was portrayed as a way to bolster the borrowing power of small business owners.
Customers are now able to borrow 80% of an asset’s value across the industrial, retail and mixed-use segments. In the case of industrial, this represents a third of an increase from the previous 60% LTV limit.
There is undeniably a risk factor on both sides for securing capital with higher leverage – there is typically a greater risk of default on the borrower side, while the potential for collateral depreciation can cause security margin risk for the lender.
Coupled with the fact that business lending falls outside of the regulatory framework laid out by the National Consumer Credit Protection (NCCP), meaning there are fewer customer protections, the critical importance of the brokers in guiding SMEs through highly leveraged deals becomes crystal clear.
Importance of brokers
Stakeholders in the business lending space commonly espouse the importance of fostering close professional relationships at all stages of the transaction process to mitigate these risks. This is particularly pertinent given the increasing convergence between residential and commercial broking.
“At ING, we’re certainly seeing more brokers entering the commercial lending space as they come to appreciate some of the commonalities between residential and commercial credit,” Esho said.
“Whilst the commercial origination process is different, the core principles of credit hold across both.
“With the focus on building sustainable long-term customer relationships, diversification into commercial and asset finance is empowering brokers to cater for more of their clients’ finance needs.”
Esho noted that this trend has ramped up competition in the commercial broking space, as “more business borrowers are considering finance options outside of traditional business banking relationships”, which inevitably bodes well for the commercial broking industry.
For lenders, it is important to gain the trust of the broker in order to secure a steady stream of mandates within this competitive space. “This will be one of the key factors in growing our commercial portfolio in the broker channel,” Esho said.
