Member Article

Raising Business Finance: The Intermediaries Involved

Applying for some types of business finance is as easy as contacting a reputable lender, submitting an application and awaiting the transfer of the funds. Elsewhere, it is inevitable that several intermediaries will need to be involved in the process.

Generally speaking, the more extensive the business loan requirement, the greater the complications in accessing it. This can lead some to surmise that minimising the involvement of intermediaries makes sense, in order to streamline and simplify the application process.

In reality, involving the right people at the right time can pave the way for a smooth and simple transaction. Not to mention, a high likelihood of getting the best possible deal on any commercial finance product.

With this in mind, here is a brief overview of the main intermediaries involved in the procurement of business finance:

Your Accountant

If your business uses third-party accountancy services, their advice and input should be sought before applying for finance. They may be able to point you in the direction of the best lenders to suit your requirements and could also advise you on the most cost-effective funding options available.

Of course, they will also need to receive full details of any transactions conducted with commercial lenders, which may need to be declared on your tax returns.

A Finance Broker

When the decision to seek funding has been finalised, the first port of call for any business should be a finance broker. Independent broker support can make it much easier to narrow down the options available and to find the perfect funding solution for your business.

In addition, many lenders offer their services exclusively via broker introductions. This means that the only way to truly compare the market in its entirety is with broker support.

Once a specific product and lender have been selected, your broker will handle the negotiations on your behalf. This could pave the way for preferential interest rates and reduced borrowing costs, compared to the ‘direct’ approach to a loan application.

Most finance brokers offer their services free of charge to their clients, so there is nothing to lose by seeking their input before applying.

Your Legal Representative

It is also prudent to keep your solicitor informed of your intentions – particularly if you are planning to take out a major commercial loan or mortgage.

Your solicitor (or equivalent legal representative) should be enlisted to comprehensively scrutinise any contracts or agreements you will need to sign. Their advice on your entitlement and obligations could prove invaluable, which differ significantly from one commercial finance product to the next.

As with your finance broker and accountant, your legal representative may also be able to share invaluable information on trusted lenders to target with your applications.

Your Insurance Provider

Taking on any major form of debt inherently puts your business in a somewhat risky position. This is particularly true when it comes to secured loans, which attach the risk of repossessed assets in the case of non-repayment.

Consequently, you will need to speak to your insurance provider, in order to see where you stand. Taking on additional debts could result in a review of your current business insurance being necessary. As could the allocation of these funds – purchasing new equipment, enhancing and improving premises, relocating, buying vehicles and so on.

An Independent Financial Adviser

The support of a suitably qualified independent financial adviser could prove invaluable.

The services of IFAs are typically associated exclusively with personal financial advice, on products like pensions, ISAs, and so on. Even so, an experienced and capable IFA could provide the broad advice and guidance you need to choose the ideal funding solution for your business.

The support of an IFA can be particularly helpful, simply because they are 100% independent. They have no loyalty to your business or to your prospective lenders and therefore can provide you with honest and objective advice. - https://ukcommercialfinance.co.uk

This was posted in Bdaily's Members' News section by iCONQUER Ltd .