Having worked in senior positions in High Street Banks and then for the last ten years having run a brokerage, I often ask myself – why on earth don’t businesses and property investors use a broker more often to assist in raising finance?
Indeed, I think this is a fundamental question when looking to raise business finance.
So, perhaps it’s worthwhile highlighting a few of the scenarios where a broker can play a vital role in ensuring the right type of finance is sourced, with a lender suitable to the project or purpose of the loan and a rate and product terms that the client can understands and can afford.
All lenders have their own sector preferences when it comes to their appetite to lend. This means they are keen to lend in some markets, but there are many enterprises that they will not fund. So for example, the high street Banks are very selective with funding investment property and development schemes.
All lenders have their own permutations of rates and criteria. The lending market is huge and getting bigger – there are at least 250 commercial type lenders in the market place. Many Banks are shedding their experienced managers in favour of a standardised process and systems approach, which does not sit well with many clients.
By way of contrast, an experienced broker employs managers who are highly experienced in the commercial and business finance sector. They can understand and present a business to a lender in the best light to help their funding need be accepted. They know which lenders are likely to lend on that particular type of case, who will offer the best service, and who will offer the best rates. In essence, a good broker will help you through this product maze.
They also have considerable knowledge of property investment, development, and various other business sectors which enables them to provide more generic advice and support to clients throughout the transaction, and ensure the terms of the loan are clear and transparent to you.
If a business seeks finance themselves, how do they know that they are getting the best deal, receiving the best service, and most importantly, how sure can they be that the bank they are using is ultimately going to approve the finance that they need with the minimum of fuss? And how much time, effort and frustration do they have to endure in going direct to a lender – and quite possibly not then get the best terms – or even an approval at all.
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, particularly when it comes to commercial, bridging and development funding for complex cases.
A good commercial broker cuts through and addresses all of these issues. They will usually tell you fairly quickly whether you can get funding, and at what terms. 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. They will seek the best terms available for your needs.
In essence a good commercial broker offers an “independent bank manager” service – all the benefits of the old high street bankers but whole of market choice, even for more specialist funding requirements.
So for your next property or business finance decision, why not use a commercial broker and try Key Commercial Finance?
By Tony Newham, Director