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There is a need to shop around, and using a commercial finance broker can save you valuable time and money. They will take the time to get to know you, your business and your needs and will look to tailor the best deal to suit.
If there are new opportunities created by the credit crunch that you wish to pursue or you wish to review an existing lend, here are some tips to help you get the best deal:
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Assume nothing – just because you have been with your current bank for the last 5, 10 even 20 years do not think they will reward that loyalty by giving you the deal of the century. A business-owner was quoted 8.32% (2.5% over LIBOR) with a 1.5% fee by his own bank, a broker found him a High Street bank offering 7% (2% over BoE base) with a 1.5% fee.
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Think like a banker - normally you will present your proposal to a business manager, who makes some notes and submits your proposal to his/her underwriters. They have never met you and have probably only got 20 minutes to read 2 inches of paperwork and decide whether they wish to lend or not. Their annual bonus is probably tied into the quality of the lends they have approved in the last year. If a case is marginal or a stretch of the bank's credit policy, they would prefer not to lend and protect their bonus. You need to enthuse the Business manager and understand that he needs to enthuse the underwriter.
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Let them have all the facts – this is particularly important for start-ups – including the CVs of all the people connected to the business such as the non-executives directors.
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You do not have to move bank accounts. Simply review the lend; if you get offered a better deal, move the lend.
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Use a broker but check they have knowledge of your industry. If all they do is leasehold pubs what will they know about your livery yard, your property development proposal, etc. It is important they know your industry and have contacts in the various banks who will take on lends in your sector.
- Ask the broker if they are members of the NACFB; if not ask why. NACFB is a trade body which was set up in 1992 to introduce standards and a code of practice. (You cannot join the NACFB until you have been trading 12 months). Ask if your broker holds the Certificate in Commercial Mortgages (CeCM), and whether they are they qualified.
Good brokers have a network of business managers and will have built a reputation with them for only submitting proposals that stand up and warrant lending on.
About the author
Ron Downey is the founder of All Matters Financial, a firm of Commercial Brokers. With over 25 years' experience he has worked with all types of businesses. A lot of their new business comes via referrals from accountants, solicitors and bank managers (when their own bank won't lend). For more information see their website at www.allmattersfinancial.com |
