Specialist commercial finance explained:

When you’re trying to find the best commercial finance product for your needs, is it better to consult with a commercial finance broker or stick with your regular bank? That depends, and sometimes, for some businesses, dealing with the bank or a traditional commercial finance lender will yield the results they require with few problems. In other cases, spreading your search beyond your bank’s limited range of products will significantly save. This article will examine how commercial finance brokers work, the advantages of non-traditional financing solutions, and discuss a few case studies.  


Using a commercial finance broker has many advantages. In fact, in many cases, ignoring the option could see you lumbered with a higher interest rate, prohibitive terms and conditions, and lending that fails to account for both your line of business and ability to turn over a healthy profit. 


Almost all businesses need financing facilities for various development and daily activities. Choosing the right commercial finance solution can save companies tens of thousands of valuable dollars each year. Whether you need finance for commercial property invoice financing, looking to buy plant or machinery, or planning business growth, talking with a commercial finance broker gives you more options and a great possibility of connecting with a lender who operates in your sector. 


Commercial finance explained: 

Commercial finance is available to anyone who runs or is part of a business that needs funding to further a venture intended to generate a profit. There are many different types of commercial finance, and other lenders have varying criteria for qualification. 


Using a commercial finance broker: More options, tailored commercial finance interest rates 


It should be simpler, right? Yet, here at Agility, we hear about the same problems daily. Commercial lending can be highly inflexible. Solutions are often counter to the objectives of a broad range of organizations and business targets. Terms and conditions can occupy a narrow range, preventing access to good commercial finance options when you most need them, with long, drawn-out applications and a seemingly never-ending series of hoops to qualify. 


The trouble with traditional options for commercial financing is that they tend to be designed for broadband of potential applicants. They lack the specialism of custom-made commercial finance solutions and the agility built into private business financing. 


If you’re in the construction sector, for example, dealing with a mortgage manager experienced in the field leads to fewer hold-ups at the start of projects, during a build, and when it comes to achieving a clean, profitable exit. Likewise, manufacturers and farmers can benefit from specialist knowledge in the finance point. An application process specifically designed to identify strengths in specific sectors can reduce the risks for financiers and result in a significantly more cost-effective package with a structure that complements your daily activities and the rhythms and nature of generating revenue throughout the year. 


Commercial finance brokers in Australia: Industry-specific funding 


No matter where in Australia you operate, and even if your business takes you all over the country, having access to fast, convenient, and tailor-made financing options is an absolute necessity. That goes for whichever sector you inhabit; however, you generate revenue according to your business’s unique risks and advantages. 


At Agility, we firmly believe that adequate commercial finance starts when you pick up the phone and call us. Sure, it should account for the risks, but it also needs to consider the benefits of a project, business, or trading opportunity. After all, experienced operators have an eye for a good deal – and so should commercially finance brokers. When you’re in tune with your funding source, financing is fairer, quicker, and causes far fewer problems and delays than off-the-shelf solutions available from the banks. 


Here, we will look at how Agility helps businesses in various sectors with a broad range of problems, aims, and challenges. Agility is a private mortgage manager with access to long-term financier partners specializing in specific fields. That means we can quickly identify the strengths and challenges within any given project or venture and design custom solutions: 


Case Study One: Commercial finance broker in Brisbane and the medical equipment manufacturer 

Agility helps many clients source cost-effective finance for commercial property. In the case of one manufacturer with a factory in Brisbane, they needed to expand fast to retain a significant customer. 


It should have been a pretty straightforward situation. The client had been manufacturing specialist medical equipment for several decades, operating in a durable market and with many public sector customers – but they hit some solid brick walls when they approached the bank. 


Searching for a commercial finance broker in Brisbane, the client approached Agility with a specific set of roadblocks. Because of the nature of its products, the new manufacturing space needed to be highly specialized with a series of expensive equipment. The company also didn’t have time to hang around. To retain its customer, a state health authority, it would need increased manufacturing capacity within two years. Construction plus the fit-out and required certification would eat up almost all of that time. 


Upon contacting Agility, the manufacturer had already sounded out two funding sources. Both banks offered a limited series of products, and commercial loan officers only knew their options, meaning progress was slow. Although both lenders were prepared to deal with the client, solutions were considered a bad fit for the tight schedule. Commercial loans from the two banks involved the lender releasing funds at various intervals, with detailed inspections required between the construction and commissioning stages. The company directors envisaged delays they couldn’t afford and decided to seek an alternative. 


Consulting a private mortgage manager meant access to specialist finance options. We rapidly assessed the borrower and identified a fast, effective funding solution that met their requirements. Not only that, but Agility helped the manufacturer leverage commercial property equity in their existing facilities to enable a very cost-effective interest rate. We also looked at the specific project on merit. Rather than viewing the specialist nature of the build as a risk, we acknowledged that stringent regulatory requirements and checks were in place, electing to release construction loan funds immediately. That enabled the company to get work underway directly and stick to a schedule that saw them ready for the required increase in production. The customer was retained. 


Case Study Two: Commercial finance broker in Melbourne and the property developer 

After years of bad experiences with banks, one property developer in Victoria finally decided to try a commercial finance broker in Melbourne – with excellent results. Agility took a call about financing an apartment development in Richmond in July 2020. Although the real estate market was buoyant, some banks tightened up lending in the sector due to concerns about ongoing COVID-19 restrictions. Every lender the developer tried insisted on 50% or more pre-sales before it would fund various percentages of the total development cost (TDC). TDC-based funding typically results in lenders financing up to 70% of everything from the build and marketing costs to real estate fees, council rates, and loan interest during the project duration. 


The developer, who knew he could achieve a much better return by not selling off the plan, was frustrating. He also felt that when it came to exiting the project, he could source something a lot more flexible, and he thought that dealing with a specialist lender might offer a smoother overall path to funding. 


We looked hard at the developer, the market, and the project and were surprised the borrower was having a problem. His company had been active for more than twenty years and had a solid history of successfully turning around very similar apartment projects in and around the city. We examined the plans and realized that the market for luxury apartments in the specific neighborhood was on fire. And here’s where banks and private mortgage managers differ significantly. Instead of basing our evaluation and any loan structure on a portion of TDC, we looked further. 


The primary issue was that luxury apartments sell faster and for more money when they can be inspected physically by potential buyers. The developer had been active in this field for years and was all too familiar with the problems traditional lending could cause. Agility assessed the project’s gross realization value (GRV) – or its end value. That meant we could consider the build costs and all the associated expenses of the developer over a two-year project, but also, crucially, the return the project would yield. 


In the case of the Victorian property developer, talking with a finance broker in Melbourne had been a great idea. After contacting Agility, he discovered that a private mortgage manager could make a massive difference to a project. The developer had a DA in place, and the sixteen-apartment development was estimated to generate $18 million in sales.  


We revalued the land at $4.8 million – the developer had acquired it for $2.5 million in 2016 and then embarked on the DA application process, which meant it was worth considerably more in the current market. That told the TDC amounted to just $10.5 million, so we could act quickly, arranging finance without pre-sales requirements to get the client to the end of the project and afford the time to market and sell the apartments for the best price possible. Without time-consuming conditions, the project was completed in May 2022 – ahead of schedule. 


Case Study Three: The DA application and searching for a commercial finance broker in Sydney 

Searching out a commercial finance broker in Sydney saw a New South Wales resident save money and hassle. When the client came to us, they were at the end of their rope.   


With a successful firm and more than thirty years’ worth of experience turning around construction projects, one Wollongong builder didn’t envisage running into funding problems when they bought a plot of land in Southern Sydney. After all, the project was straightforward and had everything going for it. Over three years, the builder had put a DA in place to build two townhouses near the waterfront. The market for family homes in the area was excellent; the build would only take less than a year, and every contractor the builder needed to complete was already lined up and waiting to go. 


Enter the bank, and cue the problems. 


Upon speaking with the bank’s loan officer about a finance package that unlocked the uptick in value from the DA, it soon became apparent the builder was facing a lengthy application process and some serious hoop-jumping. In the meantime, he was in danger of losing his waiting tradies to other projects.  


The bank’s loan officer was limited to products and criteria that evaluated the project based on the land value at the point of purchase ($800,000) – which was in 2019 when the plot had no DA in place. 


The banks also estimated TDC to be $1.4 million and agreed to finance 70% of that if the builder sold one home off the plan. The trouble with that solution was that it meant marketing and sales needed to occur before the project began. The builder felt they had no option but to look elsewhere. 


After a recommendation from a friend who regularly sourced finance for commercial property via Agility, the builder contacted us, and we set to work finding a better solution. The land alone was now worth $1.4 million with a DA for two waterfront townhouses. We were immediately able to arrange funding based on the $600,000 difference, and the builder got the project underway.