Banks vs Brokers – Commercial Loans

Whether your business requires a commercial loan to help plug a cashflow gap, or a mortgage to purchase a major piece of infrastructure, you are likely to have a number of different deals from which to choose. With the expansion of commercial lenders over the last decade, traditional bank lending is no longer the only option even for large loans, and the number of potential options can become confusing. This is where financial brokers can come into the picture, offering an expert view and an unbiased assessment of the best choice for your business.

In such a potentially confusing lending landscape, the expert knowledge offered by a financial broker can be extremely useful to any business. Rather than sticking with one’s own bank, and accepting the interest rates and charges which they choose to impose upon you, a financial broker can explain the multiple options open to you. In many circumstances, a broker will be aware of lending options which you have not yet investigated, and about which you may not have heard. Any search will also include the offers provided by your bank, but will enable you to compare and contrast them with independent lenders.

Financial brokers also possess all of the advantages gained by regularly dealing with major financial institutions. This does not simply entail expert knowledge, but also superior contacts within lending organisations and an understanding of the most efficient route through processes which can often be frustratingly bureaucratic. Individual applicants may encounter obstacles to obtaining a loan which can easily be resolved by contacting the right department or presenting information in the correct way. Brokers are well versed in navigating such issues.

Of course, the services of a financial broker always come at a cost, normally in the form of a commission on any loan deal in which they have a role. Because of this, if all other conditions are equal it will be cheaper to deal with a bank or other commercial lender directly. However, it is often the case that the commission charged by the broker is outweighed by the savings made through finding a better deal than would otherwise have been possible, and the time and effort saved by employees who would otherwise be searching for the best deal for the business. You should weigh up such factors carefully when considering any commission.

The biggest drawbacks of using a financial broker are only applicable if dealing with someone disreputable. This is always an issue in any form of business, but can be particularly serious when approaching lending institutions and dealing with confidential financial information. You must be in a position to place significant amounts of trust in your broker, and the only way to do this is to make your choice carefully. Ideally, you should operate on the basis of recommendations made by friends, family or trusted colleagues. At the very least, you must ensure that your broker has a proven track record in your sector, and is accredited by a professional body.

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.

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