Lending to those who run their own business has always been a far more involved process than for those earning Pay As You Go (PAYG) Income.
The documentation required by banks generally has to span two years of income, which can be up to 18 months old at the time of assessment. COVID-19 has only increased this documentation burden as further documentation is now required to complete a more recent assessment on the sustainability of income generated from a business.
It would appear that these policies, which were originally enacted temporarily, have now been made permanent as a way to ensure a client was not impacted by a more recent downturn in their income. The differential from lender to lender as to what is required seems to be drifting even further apart. The value in a client approaching their own bank directly is diminishing as many lenders may not be able to support a business owner though a home loan application.
Business lending products can span from credit cards, through to commercial bill facilities. Then there are the additional products that support many businesses such as merchant terminal facilities and business bank accounts. All of these products are potential opportunities to improve a client’s financial situation. As they are not governed by responsible lending these products seem to be the ones that contain the most area for improvement too. To provide a truly comprehensive financial review, all areas of lending need to be reviewed. When was the last time you had your business lending reviewed?
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