Why use a commercial finance broker

Commercial finance broker in the UK, 70 to 80 per cent of all borrowing is currently sourced direct from a bank without considering the possibility of using a broker. This differs greatly from the US where it is estimated that in excess of 70 per cent of borrowers recognise the advantage of using a broker.

So what are the advantages to the client of using a Commercial Finance Broker?

Time

This, the most valuable of all commodities, can be saved in many areas.

A reputable broker will be able to turn a proposal round very quickly as they will be able to identify the most appropriate lenders for each proposal. The lenders also tend to respond much quicker to a broker application as they recognise that brokers operate on short turnaround times. The risk of upsetting a broker and losing steady deal flow has not gone unnoticed by most lenders.

Presentaion

Reputable brokers will be experienced in presenting and packaging an application on behalf of their clients, in a format that will greatly enhance the chances of securing finance.

In many cases, the broker would also attend meetings between the client and funder in order to smooth the process of securing the funds.

Choice

Most brokers have access to a comprehensive range of lenders, which extends well beyond the high street banks into merchant banks, building societies, sub-prime lenders, development funders and private lending consortiums.

Contingent Fees

A broker will normally only get paid once a deal is drawn down, with their fees being linked to the funds raised. For this reason it is in the brokers interests to present the client with the best rates as efficiently as possible. Payment on completion also ensures that a broker will remain on hand to assist with any delays with the process through to legal completion.

Preferential Rates

Brokers are able to negotiate preferential rates for clients, which, in many cases, can more than offset the cost of using a broker in the first place.

So with all these advantages, why do so many clients choose not to go down the broker route?

I offer three reasons, which all come down to awareness and image.

  • Firstly, many businessmen are entrepreneurs and feel that they do not need to outsource this task as they believe that by contacting their own bank (and if that doesn't work, the next one on the high street), they will get the best deal available. They do not appreciate the advantages of using a broker.
  • Secondly, many clients are simply not aware of any Commercial Finance Brokers (their bank manager does not always tell them) and some accountants will merely direct them to the one or two high street lenders to whom they always refer deals.
  • Thirdly, the old fashioned image of a broker is more of a seedy individual working alone from a smoke-filled back bedroom, rather than a team of qualified professionals operating within a professional environment.

Sterling Capital Reserve Ltd is a Midlands based commercial finance brokerage, specialising in raising finance on behalf of clients across the whole of the UK.

A professional team with backgrounds in the banking, accountancy and financial services sectors, enables us to add considerable value for our clients intended transaction, by looking at the broader picture of what the business is trying to achieve and introduce the necessary finance, from the most appropriate lenders, to make the deal work.

In many cases the requirement for a commercial mortgage, a factoring or asset finance facility is part of a larger transaction, often a complete refinance, a management buy out or a method of funding a corporate acquisition. In such cases our Corporate Finance Team can offer invaluable assistance in order to project manage the whole transaction.

Sterling Capital Reserve Ltd has taken the concept of brokerage to a professional level, by establishing a strong introducer base of accountancy practices, mortgage brokers, business consultants and independent financial advisers across the UK.

These professional firms are forward thinking enough to recognise the value in working with Sterling Capital Reserve in order to obtain finance for their clients.

David Griffiths
Managing Director of Sterling Capital Reserve Ltd