The trend towards using brokers is clear. I recently mentioned how over 70% of new commercial loans are routed through brokers, compared to only 15% 15 years ago. But why should you use a broker instead of approaching lenders directly?
The main reason is the sheer scale of the market – especially compared to 15 years ago. If I am to segment it, then we can say that there are the high street Banks (very conservative), the challenger Banks (broader and deeper appetite), tertiary (“subprime”) commercial mortgage lenders, state backed cash flow and gap lenders – broad appetite(useful if you don’t have sufficient deposit etc), start up lenders, specialist cash flow lenders, short term property lenders, specialist trade finance lenders, invoice finance lenders, specialist charity lenders, not for profit “ethical” lenders – and many more specialisms as well!
The secondary but still huge reason is that a good broker will have an understanding of both the appetite and the criteria of these lenders – which varies over time. Its important to target the most appropriate lenders for a deal according to the parameters and profile of the applicant, and we will do that – but still choosing those lenders from the whole of the market.
And finally speed. If we identify the appropriate lenders at the outset and know what they need, we can provide a quick approval to a finance application. And at any one time, there are lenders who for whatever reason are very slow. We find that nearly all lenders have times when there service levels slip – often due to a previous product promotion or perhaps a reorganisation. We know who these are at any one time and will seek those lenders who offer the quickest response and most efficient processing. This isn’t always possible if our client wants the very best terms and therefore accepts compromises on speed, but we often can and do offer both!
Our next post will be focusing on “what are lenders looking for” – we will do a deeper dive into lenders criteria and how to meet such.