Are you buying or starting a business but don’t know where to start looking for finance?
Do you find you are far too busy to spend time researching and negotiating with finance providers about start-up business financing?
Have you already been rejected by financial institutions and are beginning to lose hope?
If the answer to any of these questions is ‘yes’, then it may be a good idea to hire a finance broker, who can arrange finance on your behalf.
A good broker will provide a dedicated one-to-one service, keeping you fully informed of the options available, what each option entails, and its benefits and drawbacks. And he or she will have the knowledge to find a range of suitable finance options quickly, and the expertise to negotiate a better deal than you could by yourself.
A broker will know which kinds of finance suit your needs, depending on your financial means, the sector you want to enter, your likely profit margins, and a number of other factors. Normally a broker can take some basic information from you over the phone and provide a decision in principle within 24 or 48 hours, making the process simple and quick. When you have decided which providers to approach, brokers help you package and present your proposals in the right way. They keep abreast of any policy changes at banks, and so can help tailor your proposals to avoid rejections.
You may have already been turned down for start-up business financing – but this could be more to do with how your proposal was presented rather than the proposal itself.
“We often get people coming to us as a last resort,” says Dave Grooms from Sovereign Commercial Finance. “They have tried the high street banks, without any luck.”
“By structuring and packaging the deal in a way that meets the banks’ criteria, we can often place the loan with the high street bank that originally turned the loan request down.”
Monopoly broken
When you think about raising the funds to buy a business, banks tend to come most readily to mind.
However, there are hundreds of lenders in the market, some of which will specialise in specific industries or products. So, for instance, if you were buying a garage, it would make sense for the loan to be placed with a lender that specialises in funding garages.
This diverse market for finance provision is likely to be less familiar to you than to a finance broker. In all probability, you will find the process more time-consuming and/or you will end up selecting a provider that is not the most suitable. A broker can get you the best deal – so the fees you pay the broker can be more than offset by superior rates and terms.
A one-dimensional approach to raising finance can be a bad idea. Banks lend on inflexible terms – and they often reject those with the greatest need anyway.
Finance brokers help you look beyond your local bank and tailor a financial package to your needs and resources from a range of finance providers and types of finance.
Negotiations
Once you have chosen one or more providers, the broker can use his or her negotiating experience to thrash out a deal with the rates and terms that best suit your situation. Because of their up-to-date, extensive knowledge of the financial provision market they know exactly how much leverage they have in negotiations.
Of course, the choice is always yours. A broker simply provides you with options, and helps you understand them to make an informed choice.
Beyond buying
A finance broker can help you after you have bought the business – to obtain capital as the business grows. If you need new equipment or vehicles, for instance, then a range of lease and purchase options will be found. Alternatively, if you need to expand your existing premises or buy new ones then a range of secured loans and commercial mortgage facilities will be uncovered by the broker.
Brokers also advise on consulting, business planning, business restructuring, management buyouts/buy-ins and turnaround finance.
Why not save your self time and money and hire a finance broker to get you a finance deal that suits you? Click here to check out the directory of finance brokers on BusinessesForSale.com.
This article was written with the help of David Grooms of Sovereign Commercial Finance. David can be emailed on david@sovereignfinance.net or called on 0800 011 2691.
