Ask the Experts – Equipment Financing – “THE SEQUEL” From Mark Turner at BME
On Tuesday the 22nd June, I spoke with Andrew Clark from Moody’s about why SMEs are keeping finance separate from the banks.
Today, I spoke with Mark Turner from BME, a QLD-based equipment financier about how everything from heavy rain to Julia Gillard is putting the brakes on broking north of the border.
James/ In response to the blog I posted on Tuesday, you contended that to be a complete broker, one has to look beyond mortgages?
Mark/ Mortgage brokers are fine looking after the “mum’s and dad’s market”, but I think they get out of their depth when they start dabbling in the commercial side of lending.
James/ What do you mean?
Mark/ Their attitude is: “We just do mortgages.” Brokers need to go beyond this. And banks…they’re making things difficult. Coming up with excuses about “why not to do business.” Brokers need to use other finance products to help-out self-employed and business people.
James/ So small business is the meat in the sandwich?
Mark/ Yes, as brokers you can’t just look for disbursement of commissions, you have to provide complete service.
James/ So you can’t just shoot em and chuck em on the wagon?
Mark/ Not if you want to do well. We try to build sustainable relationships.
James/ How’s business been for you over the last six months?
Mark/ Infrastructure projects picked-up right up to last December, but then heavy rain throughout northern NSW and QLD for the first quarter of this year put everything behind again by about 3 months.
James/ So work stopped?
Mark/ For the most part. Put it this way, I had a lot of clients on the phone looking for ‘payment holidays’ on their equipment finance facilities.
James/ What’s the process here?
Mark/They present their case to me, and I make a presentation to the lender. Which means, I find out why they did not have enough cash to tide them over…what are they going to do to fix it..How are they going to repay the lender!
James/ What are the terms for repayment?
Mark/ An equipment finance contract generally has a 3 month buffer built into it. If the application for a ‘payment holiday’ is successful, the lender tacks on two or three additional payments to the back-end of the contract. However, if the client makes no attempt to catch-up with those repayments after returning to work, it can be a black mark on their credit history.
James/ So you really have to manage them through the process?
Mark/ Yes. We’ll use commercial mortgages, residential mortgages, equipment finance, cash flow funding (such as AR Cash Flow) and even insurance premium funding. Whatever it takes to get them across the line.
James/ Julia Gillard has just been named as the new PM. How will this affect your business?
Mark/ What we need is consistency and stability. Infrastructure project payments will stop once the election is announced…it will put everything on hold for another 2-3 months and in our business this affects small and medium enterprises for example new staff and business equipment purchases.
Name: Mark Turner
Email: [email protected]
BME (Business Mortgage Equipment)
13 Tibor Court, Ashmore, QLD 4214