3 reasons to consider using a finance broker for your next business loan
Whatever your business needs, a finance broker can help you get approval for the most appropriate and cost-effective solution.
Small business owners who need money to expand, invest in new equipment or smooth out their cash flow often head straight for the bank. However, just as a mortgage broker can draw on a wide range of options to help you find the right home loan, so a finance broker can help you source the most suitable loan for your business needs.
Rob Ryan, Head of Northern Region at commercial and asset finance aggregator FAST, shares three reasons why you might want to consider talking to a finance broker next time you need a business loan.
1. Access to a wide range of products
A banker is usually limited to the products and services offered by their own bank whereas a good finance broker has more options to consider. FAST finance brokers, for example, have access to more than 35 different banks and specialised lenders for loans, and the variety of products and solutions they offer include:
- fixed or variable term funding for commercial property
- business loans
- commercial bills
- cash flow funding for specialist industries such as pharmacies and accounting practices
- inventory and debtor funding
- funding solutions for working capital finance
- franchise funding
- construction and development finance
- equipment finance
“There are organisations that specialise in loans for everything from shop fitouts and light commercial vehicles to advertising screens,” Ryan says.
“Good finance brokers will consider all the options available to them before coming up with a tailored solution.”
2. An ongoing service
With more than 2 million small businesses in Australia, there’s high demand for personalised loan advice.
“There are 17,000 finance brokers helping to bridge that gap by providing the high level of support and service small business owners need,” Ryan explains.
Good finance brokers will work closely with their clients to develop an overview of a business including its history, current challenges and plans for the future, he adds.
“Businesses are constantly changing,” Ryan says. “A finance broker can help you anticipate peaks and troughs and suggest finance solutions that could help you create more stability.”
A good finance broker will usually check in once or twice a year to ensure your finance solutions are still in line with your requirements.
“When you include a finance broker in your team of trusted advisers they can help you stay on the front foot,” Ryan says. “You’ll be better placed to plan out your future rather than react to change as it happens. Many of those who are also qualified mortgage brokers are broadening their areas of expertise to include leasing and small business lending.”
3. Taking care of the application process
At a meeting hosted by the Reserve Bank of Australia in September last year, the message from the Small Business Finance Advisory Panel was that many small businesses can find it challenging to access finance.
“In this environment, the application process is particularly important,” Ryan says. “Finding the right information can be very time-consuming but, if you rush through it, you’re reducing your chance of having the loan approved.”
A finance broker can take care of the whole procedure, ensuring that the information is complete and correct.
“They can also highlight positive aspects of the business by providing background information you might not think to include,” Ryan says. “Finance brokers work with lenders every day so they know what they’re looking for, and they can also negotiate on the client’s behalf.
How to find the right finance broker
Your accountant may be able to recommend a good finance broker – and Ryan recommends you choose someone with at least a Certificate IV in Finance and Mortgage Broking and who is, ideally, a member of either the Mortgage and Finance Association of Australia (MFAA), the Finance Broker Association of Australia (FBAA) or the Commercial and Asset Finance Brokers Association (CAFBA).
“It’s a good idea to ask about their track record and whether they have references from other clients,” Ryan says. “You should also confirm that they’re able to access products from a wide range of banks, credit unions, building societies and specialist lenders.”
From there, the key to a successful relationship is transparency. As Ryan points out, the more information you provide, the easier it will be for your finance broker to find the loan that best meets your needs.