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The commercial lending landscape is ever-evolving, but the speed of change has ramped up in the last three years. Peter Vala of Thinktank shares his thoughts on what’s next
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THE LAST two years have been challenging for borrowers across the country. Intermittent lockdowns and a changing economic environment have made it increasingly difficult for businesses to demonstrate consistent and reliable income.
So, how can a broker support their client’s loan application when historical financial statements are not a true reflection of the current trading position?
It’s a question that's been weighing heavily on Peter Vala’s mind of late. As general manager – partnerships and distribution at Thinktank, he’s keenly aware of the complex and intersecting pressures on lenders, borrowers and brokers.
“Now that we’re starting to emerge from the lockdowns, plenty of businesses are looking for an increase in working capital,” says Vala. “We’re seeing businesses looking to relocate operations, employ staff or undertake commercial property acquisitions. They’re restructuring their existing finance facilities to better terms and freeing up cash where possible.”
Leading property lending specialist Thinktank has provided over $5.0bn worth of commercial, residential and SMSF lending solutions since 2006. Over this time, Thinktank has enabled thousands of borrowers to achieve their goals of acquisition, refinance and equity release.
As an independent lender, Thinktank has established a respected track record in capital markets, having issued over $2.5bn in AAA-rated bonds to Australian and global institutional investors to date. The company has more recently introduced two mortgage-secured investment fund options for Australian wholesale and sophisticated investors.
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“Now that we’re starting to emerge from the lockdowns, plenty of businesses are looking for an increase in working capital. We’re seeing businesses looking to relocate operations, employ staff or undertake commercial property acquisitions”
Peter Vala,
Thinktank
Breaking the lockdown cycle and preparing for the new commercial landscape
So, businesses are again becoming borrowers with ambitious goals. But as Vala himself says, it’s not necessarily been easy. Extended lockdowns have had a significant impact on the ability of many SMEs and the self-employed to trade. It’s a situation that’s left brokers in a bind.
“While many businesses experienced lower than anticipated trading at times, we also saw others adjust their business model and increase their activity,” says Vala. “Irrespective of the outcome, such instability has placed added pressure on borrowers to meet serviceability or policy requirements, particularly in demonstrating an accurate reflection of current and future trading performance.”
Each of these would be a considerable concern on its own, but when confronted in unison, it’s hard not to see the potentially hydra-like problems that could emerge. But Vala remains quietly confident that these can be averted, or at least tackled head-on as they arise.
“It’s not something that can be solved overnight, and I think it’s going to need some flexibility – but ultimately we’re all working towards the same goal. This is an opportunity for Thinktank to act as a strong ally for brokers, and we’re really eager to embrace that.”
Delivering the right products for the right purpose
Vala is a firm believer that part of the solution is having the right products available to borrowers. Brokers are an essential part of the chain; the loan landscape in general has become vastly more complex, even without the vagaries of COVID-19. Brokers are virtually indispensable to helping both new and experienced borrowers secure loans. But what, Vala asks, is the point of having all these loan experts out there if there are no products suited to the borrower?
“I think it’s fair to say that I’m an advocate of product-driven solutions,” he says. “All of our commercial lending products are simple, flexible and designed to appeal to SMEs and brokers alike.”
Vala points to one initiative that Thinktank has already undertaken to help provide relief to brokers and borrowers.
“As new lenders enter the market and the range of products and services broadens, brokers will be central to helping Australian consumers and businesses achieve their financial goals. Being there to help clients navigate an increasingly crowded lending landscape will be essential”
Peter Vala,
Thinktank
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Companies
People
Newsletter
About us
Authors
Privacy Policy
Conditions of Use
Contact Us
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Copyright © 1996-2022 Key Media, Inc.
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People
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Given the volatility of the past two years, will various industry sectors and property types experience more conservative analysis with respect to borrowing requirements?
With remote and hybrid working arrangements becoming more commonplace, will this impact on future property values due to less demand for certain office and retail space?
When interest rates begin to increase, how will borrowers react to potential affordability issues in servicing their current debts, and as their capacity to borrow in the future is affected?
“We're able to reset the loan term to 30 years with no annual reviews, ongoing fees or property revaluations,” he says. “Thereby, you’re already significantly reducing monthly repayments and improving the overall cash flow for the client’s business.”
From a borrower’s perspective, Vala says, Thinktank’s loans are quite similar to normal residential loans. They have also been tailored to accommodate the oft-unique income streams of SMEs – something that’s especially critical when you consider the disruptions of the last couple of years. If getting historical financial statements to meet full-doc serviceability requirements presents an issue, Thinktank’s Commercial Mid Doc product offers an alternative form of income verification by simply relying on a self-certification declaration along with one other form of supporting documentation such as a templated accountant’s letter, which can be remotely completed and signed.
Vala also gives considerable kudos to Thinktank’s team of experienced relationship managers. After all, if now isn’t the time for them to help, when is? In practical terms, their assistance often involves workshopping the loan with the broker, a credit manager and the relationship manager themselves.
“Our team of highly experienced relationship managers are on call to assist and support the workshopping and deal preparation of any type of commercial, SMSF or residential property transaction,” Vala says. “They’re with the broker every step of the way, both in helping expand relationships and networks in commercial lending, through to assisting in structuring a deal to best suit their client’s needs.”
“We will always work with brokers to look for ways of easing their clients’ financial concerns relating to debt repayments or borrowings impacted by rate increases,” says Vala. “In tandem with our flexible loan options, set-and-forget terms and deep experience in the SME sector, we’re committed to working with brokers and their clients for the long haul.”
Thinktank provides education and market insight for brokers
“Now that we’re starting to emerge from the lockdowns, plenty of businesses are looking for an increase in working capital. We’re seeing businesses looking to relocate operations, employ staff or undertake commercial property acquisitions”
Peter Vala,
Thinktank
Coming later this year: Advanced SMSF 201 Concepts & Marketing, a continuation of Thinktank's
SMSF 101 course, will offer deeper insights and enhanced education in SMSF and commercial lending
Commercial and SMSF accreditation sessions of differing levels for brokers looking to expand their skills in commercial property lending
Formal and informal education sessions, from webinars and ‘lunch & learn’ sessions to boardroom workshops
Vala also highlights the ‘set and forget’ feature of a number of Thinktank’s loans. This offers significant benefits for the broker and their client – most notably, peace of mind throughout the loan cycle.
“We don’t conduct regular revaluations on our commercial property loans – ever. If the property market softens due to an easing in demand or an increase in interest rates, our loans remove the risk and inconvenience of borrowers needing to restructure their loan or pledge additional security.”
Ultimately, Vala wants Thinktank to be known for its accommodating approach in difficult and complex times.
Breaking the lockdown cycle and preparing for the new commercial landscape
So, businesses are again becoming borrowers with ambitious goals. But as Vala himself says, it’s not necessarily been easy. Extended lockdowns have had a significant impact on the ability of many SMEs and the self-employed to trade. It’s a situation that’s left brokers in a bind.
“While many businesses experienced lower than anticipated trading at times, we also saw others adjust their business model and increase their activity,” says Vala. “Irrespective of the outcome, such instability has placed added pressure on borrowers to meet serviceability or policy requirements, particularly in demonstrating an accurate reflection of current and future trading performance.”
Vala sees a number of different conversations swirling in the industry and potentially emerging as challenges in the commercial lending landscape in the months and years to come.
“As new lenders enter the market and the range of products and services broadens, brokers will be central to helping Australian consumers and businesses achieve their financial goals. Being there to help clients navigate an increasingly crowded lending landscape will be essential”
Peter Vala,
Thinktank
“Now that we’re starting to emerge from the lockdowns, plenty of businesses are looking for an increase in working capital. We’re seeing businesses looking to relocate operations, employ staff or undertake commercial property acquisitions”
Peter Vala,
Thinktank
Delivering the right products for the right purpose
Vala is a firm believer that part of the solution is having the right products available to borrowers. Brokers are an essential part of the chain; the loan landscape in general has become vastly more complex, even without the vagaries of COVID-19. Brokers are virtually indispensable to helping both new and experienced borrowers secure loans. But what, Vala asks, is the point of having all these loan experts out there if there are no products suited to the borrower?
“I think it’s fair to say that I’m an advocate of product-driven solutions,” he says. “All of our commercial lending products are simple, flexible and designed to appeal to SMEs and brokers alike.”
Vala points to one initiative that Thinktank has already undertaken to help provide relief to brokers and borrowers.
“If the property market softens due to an easing in demand or an increase in interest rates, our loans remove the risk and inconvenience of borrowers needing to restructure their loans or pledge additional security”
Peter Vala,
Thinktank
Vala sees a number of different conversations swirling in the industry and potentially emerging as challenges in the commercial lending landscape in the months and years to come.
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