Why use a Commercial Finance Broker in the UK?
In this mini blog we’ll discuss what a commercial finance broker is, the benefits of using a commercial finance broker, how to choose a commercial finance broker, how much should you pay and what they actually do.
What is a commercial finance broker?
We’re talking layman terms here – a commercial finance broker in essence is an intermediary that works on behalf of you to find you the right finance for what you are looking for. Not all commercial brokers offer all services related to commercial finance; some focus on property, some on asset and invoice finance and business finance, some offer both regulated and non-regulated (difference between securing debt on your main residence and not) and some have just bought a franchise as a new business idea without training and experience.
A good commercial broker is experienced, holds some sort of qualification and usually is whole of market (meaning they can use all lenders that are in the market in the UK, opposed to just a select few)
Your broker should have a conversation with you to ascertain what you are looking to do and will tell you a) whether it is possible b) costs involved c) set up time and anything else that is relevant to the application.
Should you pay a fee and if so, how much?
This is a very much debated topic of discussion, especially amongst property focussed commercial finance brokers. Ultimately, if you are not paying a fee for your broker why would they prioritise your case over any others – there is also a grey area as will they place you with the best lender or will they opt for the lender with the largest procuration fee [fee paid to the broker by the lender for introducing the case] You may feel that they broker is paid from the lender but ultimately who are they then working for you – you or the lender?
A commercial finance broker doesn’t just complete the application form for you. They source the loan which does take some time to do as well as liaise with the lenders and solicitors to get the completion in on time.
The benefits of using a commercial finance broker in the UK
There are far too many to list in the short blog, so we’ll go for the top 5
1) If you opt for an independent whole of market broker based in the UK – they will have access to lenders that are intermediary only. [Lenders that are not available to Joe Public]
2) They will save you time. Let’s be honest, mortgage applications are a HASSLE. Let the broker DO the work for you. We work on an upfront basis, yes, we will ask you for an awful number of documents, but these are all needed and the quicker you get them across, the quicker you can have your finance.
3) They WILL save you money. Pay the fee, a good broker will save you thousands
4) A good broker will offer solutions that you thought may not be possible, need cashflow but your business is brand-new, but you have a mortgaged property…let us broker that for you.
5) They can introduce you to potential investments and introduce you to people to strengthen your network of professionals.
How to choose a commercial finance broker in the UK?
This is a tough one – I would always go for someone that is experienced, that is qualified and that is recognised whether that with the FCA or part of a professional association. Many brokers have decades of experience within banking and they have hopped over to the broker side. Many of the veterans have their chartered banking qualification, many others such as myself have a mortgage qualification such as CeMAP and then there are the rogue few that have no qualification or experience and have just bought a franchise and attended a training session.
Have a chat with them. Do you get on? Afterall you will be disclosing personal details to them – Do you trust them? Do you get a good vibe from them? This is important. Look at it like dating, you don’t get on – move on – they won’t have your best interest at the forefront of their work ethic.
Do you need to choose a local broker?
No - is the answer to that. We organise finance for clients overseas, Scotland, Wales and also England! Staying current and up to date is a big part of the industry, so being available to meet the lenders often to receive updates is crucial -many of the lenders we work with are on speed dial in our WhatsApp!
Finally – what do we actually do?
We have sort of covered this off, but we’ll round it up here. We work on behalf of the CLIENT sourcing the best loan according to the type of requirement you have. We should have access to the whole of market, be available, knowledgeable, experienced and approachable. We complete the application for you, we monitor the application and deal with any hiccups that could and possibly may happen enroute to completion. Essentially, we take the stress out of the application for you!
If you are have spoken with a couple of finance brokers but aren't happy with the service or guidance given, give My Broker UK a call, we will certainly take the time to listen to you and will let you know whether we can assist with your query.