Platform becomes one of nation's largest as brokers look to diversify
The danger for residential brokers of losing a customer is greater now than it was five years ago, as competition has grown and clients seek one-stop shop solutions, according to Dino Pacella, the head of third party relationships at Marketplace Finance.
Pacella (pictured above) said this was why mortgage brokers were increasingly turning to Marketplace to find the best commercial lending solutions for their clients.
Set up in 2019 by Jean-Pierre Gortan and Matthew Johnson, the founders of commercial brokerage Simplicity Loans & Advisory, Marketplace Finance has become one of the largest commercial referral businesses in Australia
“In just the first 12 months of operation, Marketplace Finance successfully onboarded 88 referral partners,” said Pacella.
“This impressive growth trajectory has continued, and we now boast a network of just over 3,000 referrers. Our expansion has been significantly bolstered by forming strategic partnerships with the two largest aggregator groups in the country, LMG and AFG.”
Referrers include mainly brokers and accountants and some developers.
Pacella said the Marketplace Finance team had also grown, expanding from a single individual to a dedicated team of four, which included relationship managers across Sydney, Melbourne and Brisbane.
“They are committed to educating brokers on diversifying into commercial lending without detracting from their core business.
“The focus is on how brokers can bring in new clients, increase revenue, and reduce runoff.”
Pacella said the business came about due to the growing number of inquiries Gortan and Johnson received from other broker businesses seeking their expertise and assistance with commercial deals.
“Leveraging their extensive experience and outstanding reputation within the commercial lending space, they embarked on a journey to create a unique platform that would meet the needs of brokers nationwide.”
Pacella said success was driven by a dedicated team, strong trust-based relationships, and innovative technology, which meant the platform was simple and easy to use.
“We are excited to continue this upward trajectory, helping brokers diversify into commercial lending and achieve new heights of success.”
How Marketplace Finance works
Pacella said the referral platform provided a quick and simple solution for brokers who didn’t have the expertise to write commercial loans.
He said brokers would do a partnership request with Marketplace Finance and if they had a commercial finance transaction above $500,000 the team would take it to market.
“We will find a solution, issue a proposal, take the client off the market and see it through to settlement,” Pacella said.
This meant brokers who wanted to focus on residential and didn’t want to write commercial loans either from a capacity or capability standpoint, could retain that client on their books.
“They can refer to us knowing that we’re only going to deal with that transaction – we don’t do residential lending.”
Pacella said Marketplace offered a market-leading split commissions agreement to referring brokers.
Commercial loan deals were handled by Simplicity Loans & Advisory but the referring broker was still updated about the progress of the loan through the platform, phone calls and emails.
The team at Simplicity had different skill sets, with some brokers focusing on construction and development while others specialised in franchises, NDIS, SMSF and agribusiness lending.
“Having connections to the right funders had been critical [to our success] as well,” said Pacella.
“When we got those complex deals that sit outside the majors or a second tier, if we go into that private space, we’ve got the right private lenders at the right connections to be able to assist the clients.”
Growing interest in commercial lending
Pacella said as the number of referring brokers grew, the more they wanted to know about generating more clients with commercial opportunities.
“We’re seeing more clients wanting an offering that they can plug into their business, whether that’s commercial, asset, consumer finance and they can still concentrate on what they do and love most.”
Greater competition in the residential lending space (with brokers almost at 75% market share) was driving interest in commercial finance, said Pacella, but for brokers it was also “the danger of losing clients”.
“So how do they ring fence their clients – and part of that is making sure that they are a one- stop shop for clients,” he said.
Pacella said Marketplace Finance had a big focus on education, especially on how to identify commercial opportunities, running workshops with brokers on how to source clients and the right questions to ask.
Commercial finance trends
Commercial development made up about 50% of the platform’s business, Pacella said.
“We’re starting to see more smaller strata complexes, townhouse complexes, with more investors moving into that market and trying to multiply their returns rather than just building a single residential property,” he said.
Pacella said there was also a big increase in demand for NDIS properties.
This was due to a greater level of government funding for the NDIS. Clients were seeking funding to build homes that catered for people with disabilities, with a smaller number retrofitting existing properties.
What growth areas are you seeing in commercial finance? Comment below
