What is a commercial finance broker? How can they help me?

Seeking a commercial financial loan can be a stressful and time consuming process. From finding a willing lender who understands your needs, to trying to source the best deals, the process can be long and ultimately, not a fruitful one if you don’t know where to look. However, one way to save yourself the hassle,

Seeking a commercial financial loan can be a stressful and time consuming process. From finding a willing lender who understands your needs, to trying to source the best deals, the process can be long and ultimately, not a fruitful one if you don’t know where to look. However, one way to save yourself the hassle, is to get a commercial finance broker to do the job for you. Their experience and insider knowledge of the market means they’re ideally placed to find you the best deals.

What is a commercial finance broker?

A commercial finance broker, or commercial loan broker, as they are otherwise known, is a professional whose job it is to act as a go-between for small business owners who are seeking loans for commercial purposes, and the commercial finance lenders who provide the loans. They play an important role in getting vital finance to the companies that need it, allowing companies to keep moving and growing.  A commercial finance broker should be highly knowledgeable about the commercial finance industry, providing guidance on how to get the best, most suitable commercial loans to their clients.

A good commercial finance broker will be able to help their clients understand how loans and interest rates work, will have contacts with commercial lenders that provide favorable services and will be able to help their clients negotiate interest rates and terms with commercial loan lenders in order to ensure that their clients enjoy the best interest rates on offer.

Deciding to hire the services of a commercial finance broker might not just make the process easier, it might also help you get the best deal.

Types of commercial finance brokers

If you decide to hire a commercial finance broker, you should note that not all finance brokers specialise in the same products and services. It’s always best to hire a commercial finance broker who specialises in the type of loan you are looking for, or who specialises in getting loans for your particular industry or type of business. It is a smart move to understand the various types of finance brokers, such as franchise loan brokers, equipment loan brokers and small business administration loan brokers and the aspect of financing that they specialise in as well as what network of loan providers they have at their disposal so you can make the right decisions and go to the best broker possible.

How do commercial finance brokers help you?

You may be wondering why you should pay for the services of a commercial finance broker when you could just go about the process of getting a commercial loan yourself.

Apart from the obvious fact that hiring the services of a commercial finance broker when you are looking to get a commercial loan will make the process run more smoothly and easily,  there are other basic reasons you should consider hiring a commercial finance broker. Some of them are:

Getting the aid of a commercial finance broker will help you understand financing options better. If you are not someone who is enlightened about the financial industry normally, looking at financial jargon when trying to get a loan might be a perplexing and frustrating experience. Having a commercial finance broker who can break down terms and help you understand that jargon in simpler terms can be very advantageous.

With a good commercial finance broker, you will understand the options that are open to you and you will be able to fully digest which ones will be best for you. You will also gain protection from having to pay more than you need to, or having to take higher interest rates than you ought to.

Due to the fact that the financial industry is vast and very diverse, there are thousands of commercial finance loan lenders out there. Trying to find the right lender to get a loan from can be a long-winded process. Not only are you not guaranteed you’ll find the right lender, but you might be risking ending up with a deal that costs you a lot more in the long run than you needed to pay. Not finding the right lender could lead to having exorbitant interest rates placed on your loan and that is not something any business owner wants to face.

How to Choose a Commercial Finance Broker

Unlike personal finance brokers, business finance brokers don’t need to have the same strict  regulatory protections in place to shield clients from mis-selling and bad advice. Therefore, it’s vital that you do your homework before entrusting the future of your business to just any old broker that pops up on the internet. A good way to check their credentials is to ask for references or case studies of other businesses they’ve worked with. If they’re online, do they have customer reviews? Also, find out if they’re regulated by the Financial Conduct Authority. You don’t need to be to operate as a commercial finance broker, and many good operators aren’t regulated, but it’s certainly a safer bet to go with a broker who is regulated by the ombudsman.

Very importantly, establish whether they do actually specialise in commercial finance.

Many self-proclaimed commercial finance brokers will actually be specialists in another area of finance, such as residential mortgages or life insurance, but may still claim to be experts in business finance as it’s a profitable sideline. Usually however, this means they haven’t got anywhere near the same level and depth of knowledge that you’d expect in a real specialist.

In conclusion, although it might seem like a no-brainer to cut out the costs of the middleman and arrange your own business finance, it can actually work out far more cost effective to hire the services of a broker as they will be able to find you the best deals and rates, meaning your loan is cheaper and better suited to your business’s needs. Finding a good broker however, who really knows their stuff, and has good inside contacts at lending institutions, is very important so do your research and ask for recommendations where possible.

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