How to expand into small business lending

Small business lending presents an opportunity for brokers to expand their business and gain new clients. 

Prospa Partners may already be working with clients who are also small business owners or sole traders looking to fund their next venture, plug a gap in cash flow or make essential purchases. 

With the relative speed and ease of commercial deals compared to other lending types, small business lending can also boost their own lending expertise – and get them started on the next deal sooner. 

We spoke with one mortgage broker about the impact small business lending has on their firm, and a Sales Manager at Prospa whose team supports brokers nationally. They each shared their top tips for brokers.

1. Examine your existing channels

Phillip Wagener, Sales Manager of Business Development, leads a team of BDMs that supports Prospa partners nationally. 

Phillip’s work has given him an insight into how brokers can grow while helping their own small business clients to thrive. 

“Every broker is a small business owner who generates an income to support their livelihood,” he says. “They know how to build a business – so there’s no need to reinvent the wheel.” 

Phillip suggests brokers reflect on how they set up their own businesses, how they currently generate business, and how they can leverage existing channels. 

“A lot of brokers generate business through word of mouth – through existing customers, real estate agents or other referral partners,” he says. “Brokers also network at business networking groups and trade shows, for example. 

“It’s about being aware that they’ve built up their business through certain channels – and they now have the opportunity to create awareness via those channels that they also offer business lending as a service.”

2. Create referrals

Phillip’s second tip is simple and concise: talk to more people. 

“An easy way a mortgage broker can diversify their business and identify new channels and clients is getting out into their local area,” says Phillip. “Speak to as many accountants as possible and join business networking groups or trade shows.” 

“If you don’t have a database of existing clients, you might have a referral partner who would be happy to complete a joint venture campaign with you and allow you to cross-sell small business loans to their small business customers.”

3. Network, network, network

Brian Warner, Mortgage Broker at Finance Partners, shares Phillip’s perspective that networking is essential if a broker is to capitalise upon business lending opportunities. 

“I’ve joined Business Network International, or BNI,” he says, explaining that it has proved especially useful when it comes to identifying prospective clients. “I’ve already picked up one new customer out of that.” 

Even better for Brian was the knowledge that the customer immediately referred him to someone else again outside the BNI network – making plain the benefit of getting out there and becoming a useful part of new networks.

4. Use technology to segment audiences

Brian has also found that leaning into technology has paid off. 

He uses software that integrates with his customer relationship management (CRM) platform to more effectively sort through his database of customers and provide a more nuanced approach to different segments within that client base. 

“I went through all my clients and identified which were self-employed,” he says of the ActivePipe integration process. “Then I created a tag in ActivePipe. 

“All of my clients receive a standard residential newsletter every month, but my self-employed clients also receive the business newsletter.” 

By segmenting his audience, Brian is able to individualise the way different clients interact with his business – and increase the chances of new business.

5. Familiarise yourself with the product

At the end of the day, brokers can engage with as many potential clients as they like, but it might not come to fruition if they aren’t able to recommend a suitable product to those clients, or convincingly explain the benefits of the product itself, says Brian. 

“Looking at my database and at my clients, I think the biggest gap in the market right now is small business lending. Banks are not interested – they prefer high-end businesses and larger turnovers.” 

This makes Prospa’s market offering, for instance, potentially more attractive to a small business audience. 

Brian’s suggestion: “Get more familiar with what products are available”, and share the word of the alternative lending options that are available.