MPA catches up with NAB’s James Sheehan and Sam Turri to find out what’s shaping commercial lending as 2027 approaches
Commercial lending in Australia is fast being reshaped by a heady mix of higher interest rates, cautious SME sentiment and a federal Budget that has redrawn the property investment map.
To understand what that means for brokers, MPA spoke to two senior specialists at Australia’s largest business lender NAB: James Sheehan (pictured, left), executive of specialist banking, who oversees the bank's business markets, trade and working capital, and equipment finance teams; and Sam Turri (pictured, right), who manages NAB's broker relationships across New South Wales and the Australian Capital Territory.
Between them, they identified five trends shaping the commercial lending market heading into 2027.
1. Rates are staying higher for longer
The Reserve Bank of Australia (RBA) lifted the cash rate by 25 basis points to 4.6% in September, its highest level since November 2011 and the fourth increase of 2026.
The move had been widely tipped, with all four major banks calling a September rate hike in the days beforehand.
For Sheehan, the decision was written in the tea leaves. "We're certainly in a part of the cycle where the RBA is still fearing inflation. Any talk of an easing bias is well over the horizon."
The central bank will now want to see how its tightening flows through to inflation while keeping unemployment in check. "They're walking a tightrope, the RBA, that's for sure," said Sheehan. Either way, he does not expect rates to return to pandemic-era lows.
His hope is that the RBA settles on a sustainable rate rather than "riding high and low cycles too much". NAB's longer-serving credit staff offer some perspective on that. "They've seen rates at 17%. So they're aware of how we need to ride out conditions and respect people that run good businesses," Sheehan said.
For commercial borrowers, the pass-through works differently from home loans. Many commercial loans, particularly larger facilities, are priced off the bank bill swap bid rate (BBSY), a market benchmark published daily, plus a customer margin. "The commercial lending rates come off an index and the index is constantly floating," Sheehan noted.
A standard variable home loan rate, by contrast, stays where the lender sets it until the lender changes it. A commercial loan tied to BBSY can move daily with the market. That means business borrowers can feel market moves well before and after any RBA announcement, which puts interest rate risk squarely in the conversation brokers need to be ready for.
2. SMEs are consolidating, not expanding
Business owners have become more cautious about how they approach growth and Sheehan is seeing a degree of consolidation in the business community. "We're seeing businesses not taking big risks, whether it's buying the place next door, whether it's joining together with another business."
The defensive posture shows up in the data. The average SME loan size fell 20% in the June 2026 quarter, but Sheehan expects a dip in lending growth, not a stall. There is still opportunity for brokers and bankers to continue to grow well into 2027.
And with fewer new deals in the pipeline, brokers are turning to their existing books. "They're heavily into retention phase at the moment, really doubling back on their existing clients," Turri said. That means more account reviews, connecting owners who want to exit their industry with potential buyers, and pointing clients towards equipment on the market at a discount.
3. The commercial broker turned trusted adviser
Turri estimated that brokers' commercial market penetration is upward of 35%, a measure he linked to the number of diversified brokers now writing commercial deals.
A decade ago the field was smaller and centred on construction and property loans, much of it written by former bank property lenders. Today, brokers work across a far wider spread of clients, segments and industries, and the skills the job demands have changed with it. Senior ex-bankers are bringing corporate-style lending experience into broking, and some now advise on club and syndicated loans.
The conversation with the client has changed too. "It's not an LVR discussion, which tends to be a resi style of conversation," Turri explained. "It's more about 'what are you doing in your business and did you know we can help you with other things?'"
Sheehan agreed. "I think these days you see a lot of the best brokers are really financial services advisers. Debt's important, but it's not just about the debt. It's also all of the input costs of running your business and how you might manage the risk around those."
Asked whether a former banker naturally makes a good broker, Turri did not hesitate. "In my opinion, yes, particularly an experienced ex-banker. Those who have seen cycles and changes in cycles understand exactly what it means, what an overdraft looks like, the cash flow cycle and the movement of money in the business."
They also know how to manage a client from origination through to annual reviews, and how to mine a client's supplier list for new business. Just as important, they speak the language of credit. "I think that all comes into play along with being able to sit at a table with senior bankers at any institution and have a professional conversation about the client," Turri said.
That does not mean every broker needs a banking background; the most successful brokers are simply the least transactional. They take time to understand a client's business and market, keep across economic news, and know when to bring in a specialist funder or the bank's own product specialists.
"We don't expect the brokers to have all the answers, but they need to have enough nous to calm the customer and bring them on the journey with them," Turri said.
Read more: Best Commercial Mortgage Brokers in Australia 2026
4. Trade finance needs built-in flexibility
On the trade side, importers are facing pressure on cost and on time. Transport costs across road, rail and sea freight have ballooned, driven by fuel and labour.
Shipping delays are adding to the strain, thanks in no small part to the conflict in the Middle East and, before that, Russia's invasion of Ukraine. In that environment, the broker's job is to secure working capital facilities that bend with the conditions.
"How do we have the right flexibility built into it so that when there are delays or changes in conditions, we've got the facilities there to assist them?" Sheehan said of NAB's approach to trade finance.
5. The Budget has redrawn the property investment map
No policy decision in 2026 has shaken the lending environment as hard as the May 2026 federal Budget and the subsequent decision to ban SMSFs from taking out new limited recourse borrowing arrangements (LRBA) to buy residential property.
Read more: Australia’s biggest non-banks address SMSF lending ban
The fallout quickly became visible on bank books and all of the four big banks have subsequently seen a drop-off in mortgage applications. "That's partly to do with economic conditions, but also less desire for investment property," said Sheehan.
With residential investment now restricted on three fronts – negative gearing, the capital gains tax (CGT) and SMSF borrowing – commercial property, largely untouched by the reforms, is the obvious alternative.
Industry leaders at MPA's 2026 Commercial Roundtable on the post-Budget reset saw the sector as a likely beneficiary, but for now, Turri sees the shift more as conversation than settlement. "There seems to be increased interest in conversation about it. I think (borrowers are) still a little bit scared to move.”
That leaves brokers with a bigger advisory job. Turri said those who know the new rules can steer clients through them and towards independent legal, accounting and tax advice. "If they're well versed in that topic, they're able to have a sit down with their clients and just talk it through.”
Advice for brokers: specialise and partner up
Aggregators have been urging brokers to diversify, and lenders are adding commercial options to broker panels day after day, but NAB is not loosening its standards in response.
"We're quite strict on our accreditation requirements," Turri said. His message to brokers is that you can't be everything to all people. There is virtue in a home loan specialist staying in their lane, and a specialist commercial lender staying in theirs.
His preferred model is partnership, with residential, commercial and equipment finance brokers referring work to each other. Sheehan said NAB backs that up with about 200 specialist product partners who run education sessions for customers, bankers and brokers. "One of our key driving factors is to service all their needs, not just be a lender," he said.
For Sheehan, that is where the next year's growth sits. "The opportunity for brokers is no longer just about writing more loans. It's about being a smarter, more educated broker and how you service your customers and show them different ideas, whether that's different structures, whether it's different types of lending, just different approaches to how they run their business."
