The 12.5% Growth Gap

Your Blueprint for Diversifying into Commercial and Asset Finance (CAF)

I. The Strategic Imperative

12.5%

Addressable Growth Gap

Difference between typical (20%) and residential-focused network (7.5%) CAF settlements.

$23B

Commercial Loans Settled

Marking substantial 31.2% Year-on-Year Growth (as of 2024).

The disparity between active brokers and low settlement averages indicates a professionalization gap. The 12.5% dividend goes to the highly skilled.

II. Beyond the Margin: Three Core Advantages

1. Revenue Resilience

CAF acts as a **counter-cyclical hedge** against volatility in the residential market. Businesses always need capital, providing stable revenue.

2. Superior Earnings

Higher, negotiated upfront fees (not standardized 0.65%). Certain products yield **ongoing trail income** based on client usage.

3. Holistic Partner Model

Shift from transaction to **lifelong financial partner**. Secures the residential relationship and maximizes Client Lifetime Value (CLV).

III. Goldmining Your Residential Book: The SME Audit

Focus on the "Accidental SME" within your existing client list.

CRM Mastery: Data Fields for SME Identification

  • Employment/Income: Self-employed, Director/Shareholder, Trust/Pty Ltd names.
  • Income Docs: Use of Alt-Doc / Low-Doc historical submissions.
  • Asset Details: Existing chattel mortgages, equipment loans, or recent CapEx.
  • History: Inquiries about tax deductions, depreciation, or expansion.

Four-Step Client Audit Checklist

1. Filter and Rank: Filter by Self-Employed/Director. Rank by Last Contact Date and Estimated Equity.
2. Profile and Gap Analysis: Review the top 50. Identify their industry and likely missing financial products (e.g., equipment finance).
3. Skill Assessment & Partner ID: Identify deals that exceed current expertise and secure specialist commercial brokers for referral/co-broking.
4. Action Plan: Develop a communication strategy for the top 20. Schedule a **"Business Financial Health Check."**

IV. Mastering Commercial Credit: The Five C's

The Five C’s of Commercial Credit

Character: Reputation, experience, and expertise of the management team.
Capacity: Ability of the business to generate sufficient cash flow (P&L, Working Capital).
Capital: Owner's personal investment or equity ("skin in the game").
Collateral: Assets offered as security (typically lower LVRs: 50% to 80%).
Conditions: Broader economic, industry, and loan-specific terms.

NCCP vs. Non-NCCP Divide

Commercial lending (property, equipment, business capital) falls **outside** the strict **NCCP** and Responsible Lending Obligations (RPL).

  • RISK: Commercial is higher risk $\rightarrow$ higher rates and lower LVRs (50\% - 80\%).
  • DUE DILIGENCE: Requires rigorous investigation of P&L, operations, and contracts (Corporations Act).
  • SKILL: Broker role shifts to a **sophisticated business advocate** (mastering 'storytelling').

V. Product Pathways & Ecosystem

Commercial Real Estate

For offices, retail, industrial sites. Assessment focuses heavily on **property income** (lease strength, occupancy rates).

Asset Finance & Leasing

Fastest growing product. Covers equipment, vehicles, machinery. Market as **'Growth Enablement'** to preserve cash flow.

Business Working Capital

Unsecured loans or lines of credit (up to $\$500 \mathrm{K}-\$ 750 \mathrm{K}$) for liquidity. Non-bank lenders offer **speed** and **ongoing trail income**.

**Non-Bank Lenders** are essential partners for flexibility, speed, and unsecured options.

VI. Execution: Conversation Frameworks

Timing & Positioning: The Financial Health Check

The best time to cross-sell is **post-closing or during an Annual Review**. Position the conversation as a proactive 'Financial Health Check' focused on maximizing **Growth, Cash Flow, and Security.**

Key Conversation Script:

“Now that your home loan is settled, I wanted to discuss how we can structure your business finances to mirror the security we've achieved here. What's your biggest challenge right now when it comes to financing future expansion or equipment needs?”

Broker Call-to-Action Checklist

Stop serving clients halfway. Capture the revenue dividend today.

1. Commit to Specialized Education: Seek out commercial and asset finance training to strengthen skills in financial statement analysis.
2. Audit Your Book Today: Implement the Four-Step Client Audit Checklist to identify 'hidden' SME clients immediately.
3. Refactor Your CRM: Ensure your system captures detailed business indicators (ABN, entity type, asset history) for automated lead generation.
4. Engage Specialists: Secure access to non-bank and specialist lender panels for the speed and unique products complex deals require.