Why use a Broker instead of just going to the Bank?
OK, so I get asked this question a lot, but I haven’t got all day, so I will try to keep it short.
When I worked in banking, I would have said there was no point in using a broker, as the Bank could provide everything you needed, right?
That was back in the late 90s when seeing a friendly bank manager like me was your first and last stop, but things have changed. Now the computer often says no.
When the computer started saying no, the growth of alternative lenders exploded and continued almost weekly, much more than an average business person could possibly keep up with.
Whilst some in this secondary lending market take a generalist approach as the banks do, many are specialist niche lenders looking at every type of asset you can fund, from your debtor book to your plant and machinery via your credit card receipts and stock, with pretty much everything in between including grants and government-backed facilities.
Along with the growth in funders, there seems to have been a big increase in brokers, so it is important that when looking at brokers, you find a reputable one that you feel you can trust and can demonstrate competence and experience.
A good broker should be able to:
They can use their knowledge and experience to cut through the background noise and identify the best funding solutions for the business.
They should be able to find the best funders, taking into account all the important factors, such as the level of funding, security, and cost.
You need to ensure that the broker can examine the whole market. However, most experienced brokers can quickly identify the most suitable funders; in some cases, that might even be the bank.
As a business, you would engage with an accountant to look at your accounts and a solicitor to deal with your legal requirements, so in my eyes, it makes sense to engage with a broker to help sort out your finance requirements.
More importantly, this will save you a lot of your precious time, which you can then use more productively in your business.
There is a bit of a dark art to packaging funding, and quite often, the best solution is not what the client initially thinks they want.
So, to paraphrase – when the Bank says no, chat with a good broker, like me, Honest John, at Sterling. We will help you find the best solution.
How to Get Involved
Got a finance question? Ask Honest John!
Email me at askhonestjohn@sterlingcommercialfinance.co.uk, and I’ll do my best to provide answers in a way that makes sense. Expect straight talk, a bit of humour, and insights you won’t find in a Google search.
So, ask away with your question—I’m ready!
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