Beyond Resi: The Smart Way to Start Diversifying into Commercial Lending

The single biggest mistake a residential broker can make is assuming their existing knowledge will directly translate to the commercial world. It won't. Commercial finance isn't just a different product; it's a different discipline, operating on fundamentally different principles, risks, and client motivations.⁴ Before you can advise a client, you must first become a student.

It's a Different Ballgame: Key Differences You MUST Understand

The most critical shift you need to make is in how you assess a deal. In residential lending, your focus is almost entirely on the borrower. You analyse their personal income, their credit history, and their capacity to service the debt from their salary.⁶

In commercial lending, the focus pivots dramatically to the asset and the business. The primary question is not "Can the borrower personally afford this?" but "Can this property or business generate enough income to service the debt?".⁶ Lenders will scrutinise the property's cash flow, the strength and length of its leases, the financial health of the business involved, and the borrower's overall net worth and experience.⁶ This transition is more than just a product knowledge upgrade; it represents a fundamental identity shift from a B2C transaction facilitator, helping a family buy a home, to a B2B strategic advisor, helping a business achieve its commercial objectives.

To navigate this new terrain, you must internalise the core differences.

Table 1: Residential vs. Commercial Lending: A Broker's Cheat Sheet

Adopting a Solutions-Focused Mindset

In the residential space, you are often a rate-finder. In the commercial world, you must become a problem-solver.¹⁴ Business clients rarely come to you with a simple request for the lowest rate. Their needs are specific, complex, and almost always time-sensitive. They might need a rapid cash injection to pay wages, urgent funding to complete a development project, or capital to seize a sudden growth opportunity.¹⁴

Your conversations must shift from "What's the best rate I can get you?" to "What business problem are we trying to solve here?".¹⁴ This requires a deeper understanding of different industries and their unique financial pressures. The needs of a retailer seeking to fit out a new shop are vastly different from those of a property developer needing construction finance.¹⁴

This is where your value as a broker truly shines. A major bank can take two to three months to assess and approve a commercial loan, a timeline that can kill a business opportunity.¹⁴ A broker who understands the landscape and has relationships with a diverse panel of lenders, including non-banks and private lenders, can provide the speed and flexibility that businesses desperately need.¹⁴

Your Education Toolkit: Actionable First Steps

Building this foundational knowledge doesn't have to be overwhelming. Here is a practical checklist to get you started:

• Master Your Aggregator's Resources: This is your first and most important port of call. Most major aggregators provide comprehensive training programs, online learning modules, accreditation pathways, and compliance support specifically for commercial lending. They are invested in your success.³
• Connect with Commercial BDMs: Start building relationships with the commercial and business banking BDMs from your lender panel. They are a priceless source of information on lender appetite, policy niches, risk tolerance, and how to structure a deal for success. They can tell you what they want to see in an application before you even submit it.¹⁷
• Read What Your Clients Read: Business owners and commercial property investors stay informed by reading business and trade publications. To understand their world, you need to immerse yourself in it. Follow the Australian Financial Review, business magazines, and industry-specific news sites.¹²
• Consider Formal Qualifications: As you progress, look into formal education. The Diploma of Finance and Mortgage Broking Management is a key qualification held by many experienced commercial brokers and is a requirement for becoming an official mentor with industry bodies like the MFAA.¹⁸

If education is the foundation, mentorship is the framework that allows you to build your commercial business safely and sustainably. While training courses provide essential knowledge, it is mentorship that provides wisdom—the kind of practical, nuanced insight that can only come from years of experience.⁴ In a field with higher stakes and fewer regulatory guardrails, a mentor is not a luxury; it's your most valuable asset.

Why a Mentor is Your Most Valuable Asset

The commercial finance world is less regulated than the residential space. Most commercial loans are not governed by the NCCP Act, which provides a robust safety net for consumers and a clear compliance pathway for brokers in home lending.¹⁰ This lack of regulation offers more flexibility but also introduces significantly more risk. Lender policies are less transparent, deal structures are more bespoke, and the potential for a costly error is much higher.¹⁰

This is where a mentor becomes your personal risk management department. They have navigated the complex deals, seen the common pitfalls, and learned the "unwritten rules" that aren't covered in textbooks.⁴ A good mentor helps you bridge the gap between theory and practice, providing the guidance and confidence needed to overcome the perception that commercial finance is "overly complex and daunting".⁴ They are the secret sauce that accelerates your success while protecting you, your client, and your business from preventable mistakes.

Where to Find Your Commercial Guru

Finding the right mentor requires a targeted approach. You are looking for a current, experienced loan writer with a proven track record. Here are the best places to start your search:

• Industry Associations (FBAA & MFAA): This is the gold standard. Both the Finance Brokers Association of Australia (FBAA) and the MFAA have official, endorsed mentor programs. Their online directories list vetted professionals who meet strict criteria, such as holding a Diploma-level qualification and having at least four years of loan writing experience.¹⁸
• Your Aggregator: Your aggregator group is a powerful resource. Many offer structured mentoring programs or can connect you with senior brokers within the network who are willing to take on mentees. They have the tools and support systems to facilitate these crucial relationships.³
• Professional Networks like LinkedIn: Use LinkedIn strategically. Don't just send cold connection requests. Identify experienced commercial brokers in your city or who specialise in a niche that interests you. Follow their content, read their articles, and engage thoughtfully with their posts. This allows you to build familiarity before making a considered and personalised approach.²⁰
• Industry and Networking Events: There is no substitute for face-to-face connection. Industry conferences, lender training days, trade shows, and even local Chamber of Commerce events are fertile ground for meeting potential mentors. These are environments where people are open to making new connections.¹²

The Art of the Ask: Securing a Mentor and Building the Relationship

Approaching a busy, successful professional for mentorship requires tact and preparation. You must respect their time and demonstrate that you will be a worthy investment of their expertise.²⁰

Follow these steps for a professional approach:

1. Do Your Homework: Before you reach out, research your potential mentor thoroughly. Understand their business, their areas of specialisation, and their professional background. This allows you to tailor your request and show genuine interest.²⁰
2. Define Your "Ask": Be crystal clear about what you are asking for. Are you looking for a one-hour call per month? Someone to review your first two commercial loan applications? A sounding board for complex scenarios? Having a specific request is much more effective than a vague "Will you be my mentor?".²⁰
3. Offer Value in Return: Mentorship should be a two-way street. Think about what you can bring to the relationship. It could be referring your residential clients to them for services you don't offer, providing a fresh perspective on their marketing, or simply being an organised, proactive, and respectful mentee who makes the process easy for them.²⁰

Once you have started your education and are seeking a mentor, your next step is to find your first prospects. The good news is you don't need an expensive marketing campaign. Your most valuable source of commercial leads is already sitting in your Customer Relationship Management (CRM) system.¹⁶

Your CRM is a Goldmine: How to Start Digging

It is highly probable that a significant portion of your existing residential clients are also small to medium-sized enterprise (SME) owners.³ They already know you, trust you, and have had a positive experience with you. This makes them the most logical and cost-effective place to find your first commercial opportunities.¹⁶

Initiating the commercial finance conversation is therefore a crucial defensive strategy. By servicing your client's full range of needs, you build a "moat" around the relationship, increasing loyalty and preventing competitors from gaining a foothold in your most valuable asset. The new revenue is a bonus; the primary benefit is securing your existing income stream.

Start by mining your data. Run a few simple filters on your CRM to build a "warm list" of prospects:

• Search for any client whose employment status is listed as "Self-Employed".
• Filter by occupation titles that indicate business ownership, such as "Director," "Owner," "Partner," or "Manager".
• Identify clients who have provided an ABN as part of their previous applications.¹⁶

This simple analysis can instantly generate a targeted list of people with whom you already have a strong, trusted relationship.

The Discovery Conversation: Questions That Uncover Commercial Needs

The goal is not to aggressively "sell" your new services. It's to broaden the scope of your existing conversations. The perfect, non-intrusive opportunity for this is during your regular home loan reviews. Instead of just focusing on the mortgage, use it as a chance to ask bigger-picture questions and listen for trigger points.

Here are some powerful, open-ended questions to weave into your next client review²³:

• "Beyond your home loan, what are your bigger financial and business goals for the next 1-3 years?" ²⁴
• "How is the business going? What are the biggest challenges or opportunities on your mind at the moment?" ²³
• "Are you planning any major changes in the business over the next year, like hiring more staff, buying new equipment, or moving premises?" ²⁵
• "How do you currently handle your business banking and finance? Are you happy with the level of support you're getting?"
• "Many of my business-owner clients are choosing to buy their own commercial premises instead of leasing. Is that something you've ever considered?"

Your job is to listen carefully for "trigger points" that signal a potential need: frustration with their current bank, plans for expansion, a desire to purchase assets, cash flow concerns, or an upcoming lease expiry.¹⁴

From Resi Client to Commercial Prospect: A Real-World Scenario

Let's see how this works in practice.

Imagine you're conducting an annual home loan review for "Sarah," a client you helped into her first home five years ago. You know from your CRM that she's a self-employed graphic designer.

With a few simple, relationship-based questions, you have uncovered a significant commercial finance opportunity and demonstrated your expanded value to a loyal client.

You've done your initial training, you're looking for a mentor, and you've identified your first potential commercial client. Now comes the most critical decision: do you try to write this first complex deal yourself?

For a truly low-risk entry into the market, the answer is no. The smartest and safest first step is to partner with an experienced specialist and refer the business to them. This "earn while you learn" model is the ultimate bridge between theoretical knowledge and practical competence.

Partner, Don't Compete: The Low-Risk Referral Pathway

The concept is simple: instead of writing the complex commercial deal yourself, you form a partnership with a seasoned commercial broker. You refer the client to them, and they handle the entire process while you observe and learn.¹² This approach transforms a high-risk situation into a win-win-win scenario.

• You Win (The Referrer): You mitigate the risk of making a costly mistake on an unfamiliar file, which could damage your client relationship and your PI insurance.⁴ You also earn an attractive referral commission, creating a new revenue stream with minimal initial effort.²⁷
• Your Client Wins: They receive expert advice and an optimal outcome from a specialist who lives and breathes commercial finance. This strengthens their trust in you for having the wisdom and network to facilitate the best possible solution.¹
• You Win Again (The Learner): This is your live apprenticeship. You get a front-row seat to see how a professional structures the deal, prepares the submission, negotiates with lenders, and manages the process to settlement. This is invaluable, real-world training that you get paid for, and it builds the practical competence you need to handle future deals on your own.¹⁴

Structuring a Win-Win Referral Partnership

While it can be tempting to work on an informal handshake, this is a mistake. A formal, written referral agreement is essential to protect both parties, manage expectations, and build a foundation of trust for a long-term, profitable relationship.²⁷

Your agreement doesn't need to be overly complex, but it must be clear. Use the following checklist as a guide for your discussion with a potential partner.

Table 2: Your Referral Partnership Agreement Checklist

Vetting Your Partner and Making the First Referral

Choosing the right partner is crucial. Look for a specialist whose expertise aligns with your client's needs. If your client is a doctor, find a partner who specialises in medical practice finance.¹⁵ Ask for testimonials, check their reputation, and ensure they have a transparent communication style that will reflect well on you.¹⁷

Once you've found your partner and have an agreement in place, your first referral is a simple three-step process:

1. Get Client Consent: Explain the partnership to your client. Tell them that for their specific need, you want to bring in a specialist from your network to ensure they get the absolute best outcome. Get their explicit, documented consent to be referred.
2. Make a Warm Introduction: Send a joint email to both the client and your specialist partner. Briefly outline the client's situation and needs, and clearly state that the specialist will be in touch to begin the process.
3. Stay in the Loop: Ask your partner to keep you updated on key milestones in the application process. This is the most important part of your learning. By observing how they handle the deal, you are actively building your own expertise for the future.