Hiring a Commercial Loan Broker – What You Need to Know

Hiring a Commercial Loan Broker – What You Need to Know

Businesses of all sizes need access to funds to maintain their operations and grow. Whether it’s time to buy new equipment to accomplish a bulk order or to open an office in a new territory; small and medium businesses often take advantage of commercial business loans to reach their goals. Typically, to apply for such a loan, you will need the required financial documents, a business plan and a lender that will evaluate your needs and offer you a loan.

However, the loan application process is not always entirely straightforward, especially if you have little experience in getting approved for business loans. One option to ensure your success is to hire a commercial finance broker who has years of experience and expertise in helping clients get approved for loans. Hiring a commercial loan broker– what you need to know.

What is a commercial loan or commercial finance broker?

A commercial loan broker is a specialist who connects small business owners and investors to help them secure commercial business loans while acting as an intermediary. Specifically, commercial finance brokers help business owners and entrepreneurs to raise finance for their business by leveraging their expertise. Opting for services of a commercial finance broker can help business owners save time and money, as these professionals have established contacts with potential lenders.

Why hire a commercial loan broker?

• Commercial lending policies can be complex. If your business is relatively new and you don’t meet all requirements set out by traditional financial institutions, lenders might turn down your application.
• Commercial loan brokers have an in-depth understanding of the finance industry and will help you get the best deal that suits your purposes.
• Securing a loan on your own can be complex and time-consuming, as it often requires extensive research to find lenders, negotiate deals, understand their terms and requirements, compare available deals and so on.
• These days, there are many alternative lending options, including cash flow lending, as well as peer-to-peer lenders, specialist lenders, challenger banks and private lenders that can help to finance your business. A broker will be familiar with these and help you approach them to get the best deal for your requirements.
• Commercial brokers know the nuances of small businesses and will evaluate your needs before applying for a loan to ensure that your needs are met.
• Since commercial brokers are not affiliated with banks, they will work solely for you and give priority to your interests.
• A commercial loan broker will facilitate the process of securing a loan for you. From evaluating your loan requirements to helping you with documentation to negotiations, the broker will guide you throughout the process.

Factors to Consider Before Hiring a Commercial Loan Broker

Before you hire a commercial loan broker, there are some questions to consider:

Do they deal in commercial business finance?

Although many brokers claim that they are specialists in commercial finance, not all of them have the necessary commercial business finance experience. Therefore, it is important to determine whether they deal solely in commercial finance or do it as a sideline to their primary business affairs. If commercial business finance is not their core competency, it is best to find someone else to help you secure a commercial business loan.

Do they have the appropriate accreditation?

​The next thing to determine is whether they have the appropriate accreditation. Your financial broker should at least hold a Certificate IV in Finance and Mortgage Broking since this is a basic requirement for their accreditation. Also, most of the commercial loan brokers are active members of the Mortgage and Finance Association of Australia (MFAA) or the Finance Broker Association of Australia (FBAA).

Do they have Professional Indemnity (PI) insurance?

As a broker with PI insurance, you will have the protection of knowing that you have recourse if something goes wrong. Therefore, it is recommended to always look for a broker with PI cover to avoid unnecessary risks. Also, before issuing the PI cover, the insurance company will check the credentials of the broker. Therefore, hiring a broker with PI insurance would also mean they are certified and qualified to help you with your loan.

Are they ‘Whole of Market’?

​The concept of ‘whole of market’ means the broker is not tied to one particular lender. Typically, a whole-of-market broker will be able to get competitive deals from many lenders. Therefore, they can get you the best deals by approaching multiple lenders and comparing their offers. When you have more choices, you can get the best loan to fit your requirements.

Are they transparent about their costs?

​As per the law, brokers need to be transparent with clients when it comes to fees and other monetary terms. However, if a particular broker does not clearly explain the fees and costs involved, it is best to move on with your search.

Conclusion:

The easiest way to find the best commercial business loans for your needs is to hire a commercial loan broker with relevant expertise in this domain. They will make the whole process simpler for you, helping you save your valuable time and money.