Around 80% of UK Business Owners go direct to their Bank when
looking for finance - compared to 20% in the USA where the services of an
independent commercial finance broker are more commonly used.
A broker earns
his money by solving a financial problem. The main thrust is usually commercial
mortgages - where a business buys property either for their own occupation or as
an Investment although sourcing finance for other purposes is also common. The
broker's business is to know the best options available in the finance market,
and to know the lenders.
Brokers look for the best loan available - and this
isn't necessarily the cheapest. It may be a more flexible arrangement (no early
repayment charges, capital repayment holidays) or a higher loan to value.
However they may also negotiate a better rate from a lender. Differences in
interest rates are usually marginal, +/- 1%; however this can make a
significant difference on a large loan.
So a broker removes the hassle of
approaching a number of lenders. The broker also does the legwork,
completing all the forms and anticipating any likely problems and finding
solutions or mitigating them before submitting a proposal to the lender. The
broker knows what the lenders are looking for and ensures the proposition is
best presented.
The independent finance market has continued to grow in this
country, especially since the establishment of the National Association of
Commercial Finance Brokers (NACFB). All reputable brokers are Members of the
NACFB and operate within their Code of Practice.
It's now perfectly feasible
to bank with one provider and to have a loan with another.
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