Sourcing finance for your business can be a bit of a minefield! There are so many funding sources available to all types of different business from high street banks to independents and everything in between. It can be daunting to know where to start and to make sure you end up securing the best deal for your business. Often this leads businesses to stick to what they know, for example their own bank, or spending hour after valuable hour exploring just some of the alternative options available.
The solution to this is use a finance broker! I’m sure you wouldn’t hesitate to use a broker in the following industries, so why should your business finances be any different:
- Insurance
- Mortgages
- Stock
It certainly isn’t your job to be in the know for the best rates in the market, let alone who would be best for the equipment, supplier’s payment requirements, deposit requirements etc. Find someone that you really trust whose job it is to know the answers to these questions! The right broker will be able to obtain the information needed to provide you with a competitive, bespoke solution to suit your individual needs.
There are many benefits of using a finance broker, a good finance broker will look at your overall purchasing plans for the year to make sure the right facilities are paired with the most appropriate assets/overall covenant. This holistic approach ultimately saves both time and money, as not every funder is right for every deal and many years of experience go into gaining the expertise to get it right first time.
An example of this is below:
You are purchasing a number of commercial vehicles to upgrade your fleet immediately and you are also looking at completing an office fit-out of approx. £200k within the next quarter. The easy thing to do would be to look at the cheapest rates on the market and to pair the vehicles with this funder, but what if this cheapest funder is also the only funder who will consider the level of intangibility required to consider that office fit-out? Ultimately you would end up needing to pay a significantly increased rate on the fit-out, rather than having paid a negligibly higher monthly payment on the vehicles.
The right finance broker will not only know the market like the back of their hand but they will also:
- Present the deal in a way to really maximise the approval
- Know which funders excel in which areas (and which underwriters to ask at which time of day!)
- Help guide you into making the right decision for your business
- Be able to discuss first year allowances and agreement types with you and your accountant
It is very sensible to keep your asset finance separate from your bank so as to not have ‘all eggs in one basket’. Whilst the banks may seem cheap, they will very often have additional charges over the business such as debentures which are not required in for the asset finance we arrange. They also tend to struggle to facilitate staged payments to suppliers or the intangible costs (such as install), unless they offer a loan – whilst this may seem to solve the problem, you will come unstuck if you need a loan for growth purposes. Non-bank loans for growth purposes tend to be short term and/or high rate, so bank facilities are worth keeping open for this reason alone.
There really do seem to be frozen perceptions surrounding asset finance and where this can be sourced from, but we are really keen to educate that finding the right broker that you can trust, will free up any busy SME owner’s time and ultimately save you money too!