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What Brokers Need to Understand About Serviceability, Strategy and SME Survival in 2026

Hermes Capital recently hosted a Broker Masterclass in Brisbane focused on one of the biggest challenges currently facing commercial finance brokers and SME advisers – how to structure deals in a market where serviceability pressure, rising costs and tighter credit conditions are colliding all at once.

Hosted by Max Szarycz from Hermes Capital, the panel brought together Nick Samios, Director of Hermes Capital, Peter Lucas from Kestrel Solutions, and Peter Johnson from Get You Loans. Together, the panel unpacked what they are seeing across the SME market right now, from growing cash-flow pressure and lender caution to the increasing use of short-term fintech lending and the importance of a proper restructuring strategy.

One of the strongest themes throughout the session was that many business owners are still approaching funding the same way they did several years ago, despite operating in a completely different lending environment today.

Credit appetite has tightened. Margins are under pressure. Interest rates remain elevated. At the same time, many SMEs are finding that transactions that were straightforward 18 months ago are now attracting significantly more scrutiny from lenders and credit teams.

According to Peter Lucas, one of the biggest mistakes business owners make is assuming that “more money” automatically solves the problem. As he explained during the session, cash is simply the blood of the business. If the underlying issues are not addressed, additional funding often just leaks back out again.

That idea became a recurring topic of discussion throughout the seminar.

“Cashflow Problems” Are Often Something Else

Nick Samios challenged the idea that a client’s presenting problem is usually the real problem.

A business owner may say they need money for wages, the ATO or general cash flow, but the panel argued that brokers need to dig much deeper than that. Why does the business need the money? What caused the pressure? Is the issue temporary, operational or structural? Is debt even the correct solution in the first place?

The panel discussed how many SMEs are now turning directly to fast-access lenders after seeing advertisements on social media or online. Funding can often be obtained quickly, but the structure behind that funding is where problems begin to emerge.

Peter Johnson explained that what used to be rare on a credit file is now extremely common: multiple enquiries from short-term lenders and stacked cash-flow facilities across the same borrower.

The concern is not simply pricing. It is the repayment pressure and the structure of the debt itself.

Many of these facilities are short-term, unsecured, and highly aggressive in how repayments are collected. Rather than solving the underlying issue, they often compound the working capital pressure already sitting inside the business.

As Nick Samios explained during the discussion, businesses frequently end up using expensive short-term debt to solve someone else’s problem rather than their own.

Serviceability Is Now Front and Centre

Historically, strong security positions could often carry a transaction. Today, lenders are far more focused on sustainable cash flow, management capability, profitability and operational discipline.

The panel stressed that serviceability assessment is no longer just about reviewing historical financials. Lenders increasingly want to understand:

• how the business actually operates
• whether management understands the numbers
• whether margins are realistic
• and whether there is a credible strategy supporting the transaction

Peter Johnson explained that many businesses appear healthy at first glance because revenue is strong, particularly in sectors like construction, transport, mining and civil works. However, revenue alone does not tell the full story. Without strong management, accurate forecasting and operational oversight, businesses can still end up under enormous financial pressure.

The panel repeatedly returned to the importance of having the right people inside the business. Strong operators are not always strong managers, and many SME owners struggle because they remain overly focused on day-to-day delivery while no one is actively managing the financial side of the business.

As Peter Johnson bluntly put it, if a business owner with 30 staff is still spending every day “on the tools”, the business will eventually struggle because proper operational management is missing.

Due Diligence Means More Than Reading Financials

Peter Lucas explained that reviewing a profit and loss statement is only one part of understanding a business. Real due diligence involves understanding the business model itself, the management capability behind it, the operational systems in place and whether the business genuinely understands its margins and cost structure.

He shared examples of businesses that believed they were making healthy profits, only to discover, after a thorough review, that most of their projects were actually loss-making. In some cases, business owners had never compared actual job costs against original quotes.

The discussion highlighted how quickly inflation, labour costs, subcontractor pricing and material increases can erode margins if businesses are not constantly reviewing their numbers.

For brokers and lenders, this creates an important distinction between businesses experiencing temporary pressure and businesses with deeper operational issues.

Structuring Deals Properly Matters More Than Ever

One of the most practical sections of the seminar focused on how brokers should think about structuring complex transactions in the current market.

Nick Samios explained that the starting point should always be understanding what the client is actually trying to achieve. From there, the funding structure needs to reflect the true purpose of the debt.

The panel discussed the importance of separating:

• long-term debt
• revolving working capital
• temporary restructuring support
• and strategic capital requirements

Too often, businesses are mismatching funding structures to the actual problem. Working capital pressure gets pushed into long-term mortgage debt, while structural business problems are temporarily masked by short-term facilities that simply delay the pressure.

The panel stressed that proper structuring requires brokers to think carefully about:

• repayment sources
• operational turnaround plans
• asset sales
• equity contributions
• and the realistic future position of the business

The objective is not simply to “get the deal done.” It is to create enough breathing room for the business to stabilise and improve.

Funding Buys Time. What Happens Next Matters Most.

Funding itself does not solve problems. What it does do is buy time.

The panel discussed restructures, informal workouts and turnaround strategies through that exact lens. Whether the solution involves refinancing, restructuring or specialist funding support, long-term success still depends on operational change occurring inside the business itself.

Without that change, businesses often end up cycling through repeated rounds of debt pressure without ever fixing the underlying issue.

Peter Lucas reinforced this point by explaining that many business owners avoid confronting the “brutal facts” inside their businesses. But without understanding where the real problems sit, no amount of funding can permanently solve the issue.

Brokers Are Becoming Strategic Advisers

Today’s brokers are doing far more than arranging debt facilities. They are increasingly acting as strategic advisers, problem solvers and commercial sounding boards for SME clients navigating difficult environments.

As funding markets become more complex, brokers who understand:

• serviceability
• restructuring pathways
• operational risk
• cash flow management
• and funding structure

will continue to become more valuable to both borrowers and lenders alike.

Because in today’s market, access to capital is only part of the equation.

The real difference lies in how that capital is structured, deployed and managed once it arrives.

Watch the full recording to learn more.

Interested in future seminars by Hermes Capital?

Check out our upcoming events here.

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