How to leverage relationships for growth post COVID-19

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Fifty-three per cent of asset finance brokers believe their settlement volumes will decrease over the next six months as a result of the impact of COVID-19, according to a poll conducted by Connective in July.

With the banks tightening credit, stricter requirements and longer delays, it’s understandable that brokers have a pessimistic outlook. But there may be several reasons for asset finance brokers to be optimistic. In fact, in another Connective poll, 25% said their volumes had increased during COVID-19.

So what are they doing right?

They’re navigating this challenge just like any other— by leveraging their long-term relationships with small business owners to identify needs and using their skills and knowledge of niche products and lenders to find solutions for customers.

Where are the opportunities for asset finance brokers?

Australia has fared significantly better than most countries during the pandemic, which should mean a less painful economic recovery than predicted.

David Gandolfo, CAFBA President and Director of Quantum Business Finance, told Connective during a recent webinar that while there’s no doubt the economy is in unchartered territory, interest rates remain at historic lows, there’s plenty of liquidity in the market and there are incentives and stimulus packages to encourage spending, which businesses are still doing.

Brokers can use this disruption to their advantage to service clients and industries that are seeing a peak in demand.

He said now’s the time for brokers to use their daily interactions with customers and business owners to inform their strategy and next steps, focusing on the value they provide as a relational broker rather than a transactional broker.

“It’s not about jumping from client to client and just focusing on the sale,” he said. It’s about developing that long-term relationship with clients, having in-depth conversations about their businesses to identify their needs and plans for the future.

One way to do that is by helping them understand and take advantage of new government assistance programs and changes to existing programs, such as:

  • Instant asset write-off: The threshold amount for each asset now covers $150,000, up from $30,000, until 31 December 2020. Eligibility has also expanded to cover businesses with an aggregated turnover of less than $500 million, up from $50 million. Eligible business can use this to claim an immediate deduction for the business portion of the cost of a new or used asset in the year it was first used or installed for use.
  • Coronavirus SME Guarantee Scheme: The government has extended this scheme to help businesses “move out of hibernation.” The first phase has guaranteed that 50% of new unsecured loans from 44 lenders will be earmarked for SMEs until 30 September 2020. The second phase, which begins 1 October 2020 until 30 June 2021, will allow the loans to be used for a wider range of investments, permit secured lending and allow SMEs to borrow up to $1 million, up from $250,000, for a maximum loan term of five years. Lenders will also have the discretion to offer a repayment holiday period.
  • Loan deferral extension: Customers and small businesses that are genuinely experiencing financial difficulty due to COVID-19 will be eligible for an additional four-month extension on top of the original six months to restructure their loan. This is where brokers can assist their customers in finding a solution that’s in their best interests.

What should asset finance brokers be doing now to prepare?

  • Focus on your CRM, business strategy and marketing: Use this time to identify customer opportunities and develop supplier relationships. Invest in a good CRM system to help maintain records, keep in touch with clients and provide insights. Use Connective’s Digital Marketing Hub to create personalised marketing campaigns that target, engage and convert the right customers.
  • Diversify your business: Look into the ancillary products that go hand-in-hand with asset finance, such as commercial loans, banking products, debtor finance, trade finance facilities and more. Educate yourself with CAFBA’s Certificate IV in Commercial and Asset Finance.
  • Stay informed: As an advocate for your customers, you need to be on top of what’s going on and ahead of what’s changing so you can help them make the most informed decisions.

How to keep thriving amidst disruption

As a small business owner yourself, you know what your SME clients are going through. Pick up the phone, listen and empathise with them; help them understand their options and advocate on their behalf. With access to a diverse panel of lenders and niche products, brokers are well placed to find solutions that will see their clients through.

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