This is a perfectly legitimate question that we at ACF Direct are delighted to respond to.
Of course, someone could simply contact lots of individual lenders and start making enquiries but we believe that such an approach is not always likely to yield an optimum outcome.
Knowing the market
A commercial loan broker operates in the loans marketplace for every hour of the working week. It is their lifeblood and in all probability, they will have a considerably greater knowledge of what products are available and where, than any private individual or company seeking finance.
That is important because lenders vary tremendously in a number of different respects:
- the propositions they are looking for. Seeking finance from lenders who are not familiar with your particular business sector or who have little interest in it, is likely to yield poor and frustrating results;
- their pricing models vary considerably. This isn’t simply a question of one lender being more “expensive” than another or vice-versa. It’s about understanding their pricing models based on individual situations and scenarios, appreciating which lenders are likely to have prices that are going to be attractive in a given set of requirements;
- their evaluation criteria can also be very different from one company to another. These are the factors they will use to decide whether or not they wish to advance money for the cause in question. A broker will be able to look at your overall business situation and identify which lenders are likely to be most sympathetic to your particular business characteristics and the situation you find yourself in;
- higher risk propositions. In terms of their basic business positioning, some lenders may be extremely reluctant to take on what they see as high-risk propositions. Others may be much less concerned about such things, provided certain minimum risk management approaches are adopted.
This is where the professional broker uses their expert level knowledge to match a requirement to a particular lender’s or lenders’ characteristics.
In reality, it may be very difficult for a private company to maintain the same degree of market awareness.
The commercial loan broker exists, in part, to ensure that propositions are delivered to lenders in the format the lender requires.
This is not always as easy as it may sound if success is sought, as lenders continue to have high expectations in this respect. It is often imperative that an application is submitted to the right person and in the right way for its chances of subsequent approval to be maximised.
This can be time-consuming and many commercial borrowers might feel that their time is better spent on running the business than on dealing with this type of administrative overhead.
It may surprise you to know that some lenders may be reluctant or even unwilling to accept open applications directly from borrowers in all situations.
Some may have products and rates that are only available to brokers, on the basis that the broker will be have been expected to have done significant amounts of research and validation of the proposal on the table in advance and before it is submitted to the lender for final consideration.
These are all reasons why the role of the commercial loan broker is so important and why they may be able to assist you to achieve your desired outcomes in terms of business finance.