|
Why Use A Broker?
Of
course, in this day and age any
business owner can simply try to
find a suitable lender on Google
or on a comparison site rather
than paying a broker. However,
it is worth remembering that not
all prospective lenders are
featured on price comparison
sites whereas a broker will hold
up to date details of current
loan offerings from all
available lenders.
Secondly, brokers know the
lending criteria of each lender
intimately. As such, they can
help a business to present its
application in the best possible
light in order to increase the
chances of being accepted for
the
loan. This aspect of a
broker's service is especially
valuable for a new business, or
for one that may have a poor
business credit history.
Further in cases where a
business is having to submit
multiple loan applications to
multiple different lenders this
can prove very time combining.
However when a business uses the
services of a broker they
complete all applications on the
businesses behalf.
Finally, some brokers are able
to exercise their volume
leverage to secure special,
preferential interest rates from
lenders.
How Much Does a Business Finance
Broker Charge?
Fee scales do vary pretty
significantly between brokers
and then alter again depending
on the specifics of the loan
being brokered. However as a
rule business loan brokers can
charge between 1 - 6% (although
there are some instances of some
brokers charging 17%) of the
total value of the loan.
Can You Trust a Business Loan
Broker?
Business loan brokers are
providing important and
sensitive financial advice. As
such a business needs to know
that they can trust their
broker. Furthermore many brokers
do receive a fee from the lender
as well from the applicant -
this could give rise to a
conflict of interest and cause
some to wonder whether brokers
can really be trusted to work in
their clients best interests.
However, all brokers are
regulated by the relevant
financial services authorities
and are routinely reviewed and
respected - penalties for
falling short of the required
standards are harsh and can
include the revocation of
trading licences.
Furthermore, any business that
uses a broker does have a legal
remedy and can seek damages in
the event that the advice
received turns out to be
negligent or if the broker acted
in bad faith.
Ultimately, brokers can be
trusted as much as any other
financial services institution
or professional services
provider.
Applying For Business Credit
From a Broker vs Lender
As
we mentioned earlier, applicant
businesses
don't necessarily have to go
through a broker. It is
possible for a business to
identify a suitable lender
themselves and then apply to
them directly for finance.
Indeed, many businesses do this
perfectly successfully.
|
