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This audio version covers: Commercial Lending – Speed vs. Relationship in a Divergent Market
Commercial Lending – Speed vs. Relationship in a Divergent Market
Executive Summary: The Dual-Speed Reality of 2025
The Australian commercial lending landscape has undergone a seismic structural shift, solidifying into a “two-speed” economy. As we navigate through 2025, the market is no longer defined by a singular credit narrative but rather by a stark bifurcation: the high-velocity, algorithm-driven ecosystem of fintech lenders versus the relationship-centric, policy-heavy environment of major banks.
This report, commissioned exclusively for The Broker Times, provides an exhaustive, data-led analysis of this divergent market, offering a strategic roadmap for brokers to navigate the complexities of the current credit cycle.
In This Report:
Part 1: The Great Divergence
The commercial finance sector has historically operated on a continuum, where borrowers moved between banks and non-banks based on credit quality. Today, that continuum has fractured into two distinct ecosystems. This section dissects the structural drivers of this bifurcation.
1.1 The Structural Split: Algorithms vs. Institutions
The divergence in the market is driven by a fundamental incompatibility between two operational models:
The Algorithmic Model (Fintech & Non-Bank)
Powered by the Consumer Data Right (CDR), fintechs ingest raw transaction data directly from bank feeds. Risk is assessed based on current cash flow volatility rather than historical tax compliance. This allows loan approvals to move from submission to funding without human intervention.
The Holistic Banking Model (Major ADIs)
Major banks remain the custodians of the cheapest capital, but access is guarded by rigorous, manual processes. They assess risk holistically, viewing the borrower as a connected web of liabilities. The “four-eyes” principle—where multiple officers review a file—creates inherent latency.
1.2 The Speed Gap: A Detailed Data Analysis
Data collected throughout late 2024 and 2025 via the Broker Pulse surveys provides a granular view of this disparity.
Business Loans (Unsecured & Working Capital)
| Lender / Category | Turnaround Time | Trend Analysis |
|---|---|---|
| Fintech Average | ~1.5 – 1.9 Days | Consistent. Automated bank statement analysis keeps variance low. |
| Prospa | ~1.4 – 1.6 Days | Consistently leads the market using proprietary decision engines.[1] |
| Shift | ~1.9 Days | Focuses on slightly larger ticket sizes but maintains sub-48-hour approvals. |
| Major Bank Average | ~7.0 – 8.0 Days | Volatile. Fluctuates based on staffing levels and seasonal demand. |
| NAB | ~7.0 – 8.0 Days | Maintains largest broker flows but struggles to bring turnaround times down.[2] |
| Westpac | ~7.8 Days | Offers fast-track options, but average remains high due to complex file handling.[3] |
The “Time Tax”: There is a clear delay of approximately one week when choosing a major bank over a fintech. For urgent working capital, the bank option is operationally unviable.
Part 2: The Technology Divide
To truly understand why the speed gap exists—and why it is unlikely to close in the near future—brokers must look “under the hood” at the technology stacks powering these divergent models.
2.1 Data as the New Collateral
Fintech lenders do not view a loan application as a set of documents, but as a data stream. Utilizing Open Banking (CDR), fintechs use APIs to connect directly to the borrower’s bank account.
- Data Extraction: The system “scrapes” 6 to 12 months of transaction history instantly.
- Analysis: Algorithms categorize every transaction, identifying revenue streams and flagging recurring expenses in seconds.[1]
2.2 Graph Databases and Decision Intelligence
Leading fintechs use graph database technology (like Neo4j) to map the complex web of relationships between Australian businesses instantly.
Case Study: Efficiency Gains
By instantly visualizing connections between directors and companies, manual verification workloads can be reduced by up to 80%. This allows lenders to approve loans in hours that would take banks days to verify.[4]
Part 3: Navigating the ‘Credit Squeeze’
The term “Credit Squeeze” suggests a universal contraction of lending. The reality in 2025 is more nuanced: it is a “Targeted Squeeze” on specific risks.
3.1 The Regulatory Squeeze: APRA’s DTI Limits
Effective from February 1, 2026, APRA has mandated that ADIs must limit new lending with a DTI ratio of ≥ 6 times to no more than 20% of their total new lending.[5, 6]
Implication: SME owners seeking equity release from their homes may be declined by major banks if their DTI exceeds 6, even if business cash flow is strong. Non-bank lenders will become the primary destination for these “squeezed” borrowers.
3.2 Sectoral Risk: The Insolvency Crisis
Lenders are tightening based on industry risk. Construction and Hospitality are seeing high insolvency rates, leading to tighter LVRs and scrutiny on “Cost to Complete” reports.[7, 8]
3.3 The Counter-Trend: Policy Easing for Self-Employed
In a move to capture market share, major lenders like Westpac and ANZ have updated policies to accept one year of tax returns instead of the traditional two-year average.[9, 10] This allows high-quality self-employed borrowers to access “bank rates” sooner.
Part 4: Industry-Specific Lending Matrix
A “one-size-fits-all” approach fails in a divergent market. Lenders have developed specific appetites for different industries.
| Industry | Risk Profile | Broker Strategy |
|---|---|---|
| Health & Medical | Low | Bank Play. LVRs up to 100% for practice purchase; LMI waivers common.[11] |
| Professional Services | Low/Med | Specialist Play. Cash flow lending against rent rolls or fee bases (Macquarie, ANZ). |
| Construction | High | Liquidity Play. Focus on Invoice Finance rather than term debt to solve cash flow gaps.[12] |
| Agriculture | Variable | Relationship Play. Regional brokers with specialized agri-lender access have the advantage.[13] |
Part 5: The Broker’s Playbook
5.1 The Triage Methodology
The most critical skill in 2025 is the ability to “triage” a lead immediately. Implement a “Pre-Qual” process asking three killer questions:
- When is the deadline? (Determines Speed vs. Relationship lane)
- Do you have up-to-date tax returns? (Determines Bank vs. Low Doc)
- Is there property security available? (Determines Rate Tier)
5.2 “Packaging” for Success
For deals that belong in the “Relationship Lane,” the broker’s goal is to minimize the friction of the bank’s manual process. Submit a “Golden File” on Day 1 including a 1-page Executive Summary (The 5 Cs of Credit) and accountant-prepared financials.[14]
Diversification Model: Spot & Refer vs. Accredited Writer
Spot & Refer: Best for residential brokers with occasional commercial needs. Minimal compliance risk, lower commission split.[15]
Accredited Writer: Best for building a business asset. Requires Diploma and mentorship, but offers full revenue retention and deeper client relationships.[16]
The Trusted Hub in a Divergent Market
In 2025, the most valuable asset a broker possesses is not their aggregator panel or their CRM—it is the wisdom to know which door to open. Whether utilizing the blistering speed of a fintech to save a business from a cash crunch, or navigating the labyrinth of a major bank to secure a generation-defining asset, the broker remains the essential navigator.
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