Need Commercial Finance? Why use a Broker?

With commercial finance available from many types of financial services organisations, a common question is “why use a commercial finance broker?”

Put simply, a commercial finance broker is there to help you with all your business funding needs. They can understand your borrowing requirements, and help you find a suitable lender, with rates and product terms that are most suitable for you and your business.

Lenders choose their market

It’s tempting to believe that all lenders operate in the same market. However, they are not normally keen to lend in all sectors or provide for all circumstances. Lenders’ view of the market, and their appetite for risk, will determine the clients they choose to serve.

So, with a broad range of lenders and products on offer, it’s important to have someone on hand who understands the market and knows which lenders to approach.

An experienced commercial finance broker will be highly experienced in a range of sectors, including commercial and business finance, property investment, development, and a range of niche sectors. This breadth enables them to provide clear, impartial and practical advice on the funding process, and support their clients throughout the transaction.

A broker works for you not the lender

In terms of representing you as an applicant for funding, a commercial finance broker can also ensure that the terms of the loan are clear and transparent to you.

They can understand and present your business to a lender in the best light, to help your funding needs to be accepted. They know which lenders are likely to lend on a particular type of  case, who will offer the best service, and who will offer the best rates.

If you seek business finance directly with lenders, how will you know that you are getting the best deal and receiving the best service? Most importantly, how sure can you be that the bank you are planning to use is ultimately going to approve the finance that you need with the minimum of fuss? How much time, effort and frustration do you have to endure in going direct to a lender – and quite possibly not then get the best terms – or even an approval at all? These are questions worth considering when you evaluate the role of a commercial finance broker.

Specialist lenders

As well as the mainstream lenders you may have heard of, there are many niche players that you will have not. Specialist lenders are just that, they service markets often ignored by banks and have developed their systems and processes for that purpose.

This is particularly true when it comes to commercial, bridging and development funding for complex cases. The lending market is huge and getting bigger, so having someone to help you navigate this complex marketplace is a big advantage.

Clear, focused approach

A good commercial broker cuts through the clutter in the market and can address all these issues. They will usually tell you fairly quickly whether you can get funding, and at what terms.

Most importantly, they will act for you, not the lender. They will make the approach to the lender on your behalf, having considered how best to do so, and will seek the best terms available for your needs.

A good broker will ensure they find YOU the best deal and will not be led by any commission offered.

In essence a good commercial broker offers an “independent bank manager” service. So, all the benefits of the traditional high street bankers but with whole of market choice, even for more specialist funding requirements.

Key questions

When selecting your Commercial Finance Broker – you may want to ask:

Do they have access to the whole of the commercial market for the finance that you require?

You will want to ensure that you are receiving an unbiased view of your finance requirements across a market wide offering, and not just from a restricted panel of funders.

Are they registered with the FCA or are they a member of the NACFB? (National Association of Commercial Finance Brokers)

Some lenders insist on brokers being registered with such bodies, therefore if your broker isn’t, they won’t have access to the whole of the market.

How will the broker be paid and what will be the total fees charged for arranging the finance?

Don’t be put off if a broker proposes charging a fee. Whilst some lenders will pay introductory commission, not all do. If your broker isn’t charging you a fee, how do you know they’re considering all the lenders out there, and not just presenting you with the lenders who pay the most commission? In some cases, the level of work involved will necessitate a fee over and above any commission payment. Any fees should be declared at the outset and confirmed again once the different finance offers are presented to you.

So, for your next property or business finance decision, consider using a commercial broker and contact Resolute Commercial Finance for a no-obligation discussion.

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