How To Choose a Business Finance Broker: Save Time & Money

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Photo by Stephen Dawson on Unsplash

Business finance has evolved over the years to the relief of business owners who in time could only visit their local bank managers for solutions. Today, several alternatives have emerged to provide a wide range of options that can meet the required financing needs.

There are several business brokers to work with and knowing the right steps to take can make all the difference.  

First, these are the three steps you can use to get the best results with a business finance broker.

1.  Let the business finance broker understand your business

In order to recommend the appropriate funding option for you, the resource persons need to know how your business works. To do this, the following has to be considered:

The nature of your business: Is your business a registered limited liability company, a partnership, or an unincorporated? Such details like business location, management team, major business activities, business assets and existing liabilities will be required. These information are needed to identify an appropriate lender.

Capacity for loan repayment:  Any lender has to be sure that your business will generate enough income to pay off the financing provided. If a lender can secure a legal charge over the company’s assets, it will be favorable to your quest for funds. Directors’ bankruptcy can be a blur if it exists.

2. Evaluation of the available financing options 

An expert business finance broker will decide on the best funding option that fits your circumstance. The range to explore include:

Commercial mortgage

Different classes of mortgage lenders are out there to meet your needs and the charges you have to pay will depend on the credit rating of your business. Other factors like your existing loans might also be considered.

Bank loans

Banks can provide an overdraft or a business loan. New lenders on the scene can also be a good source of commercial loans.

Asset Finance 

Asset financing can take the form of hire purchase or lease financing, depending on what suits your business.

Vehicle leasing

Leasing of business vehicles or delivery vans can be possible for a fee while avoiding the outlay associated with an outright acquisition.

Asset refinance 

Here, a company with equity share or outright ownership in an asset can refinance it.

Invoice discounting and factoring

Companies can raise funds by discounting their trade invoices for immediate access to cash for a fee. Big corporations with numerous customers find this more favorable than smaller companies that might feel the pinch with the extra fees going out to the fund provider. While the intricacies of lending need to be understood, as this Trading guide shows, a business finance broker will provide the needed guidance.

3. Consider if the terms are not costly

It is important that you check to confirm if the propositions by your broker are not over the top. An experienced business broker needs to be sure you are comfortable with the cost of the transaction including monthly payments. For asset finance, such terms like asset return terms or end-of-agreement lump sum payment should be ascertained. Collateral requirements like directors’ personal guarantees or a lien over the business should be on the radar too.

Conclusion

Before you choose a broker for your business finance, you need to check out a few indicators such as sectoral experience. In addition, the number of lenders in the broker’s network is also important and be doubly sure that they provide the finance requirements that you want. If the brokerage commissions are low or not required, you need to know. Do not also forget to check if the broker has the certification for the type of service you require.