Each week, our managing director and broker extraordinaire Mark Smillie prepares a brief post packed full of wisdom gained from his years in the finance industry. Join us in reading on, and discover some of the tips and tricks good brokers have developed when finding the best finance for their clients!
Good Morning,
I do hope it is with you because as you know, my job is to look after you by saving you time and money. So with this in mind: let me ask you a question.
“Which business loan are you most likely to get?”
If your answer involves anything to do with online adverts offering rates from 2% with all industry sectors and credit ratings welcome… STOP! These adverts sound too good to be true because they are. You basically have a 70% chance of wasting your time. Finance companies are inundated with applicants, they play a numbers game and 30% will take what the finance companies offered.
There is another way!
Rather than take a short-term, expensive business loan, you could take out a mid-term loan instead, with no penalties for early repayment.
• We can secure this for you at about half the rate you would be charged if you went yourself to get a short term loan.
• You will have more flexibility, without the added cashflow pressure of quick expensive repayments.
Another alternative to an expensive short-term loan is selecting some invoices and letting us finance them. You will still collect them as normal. There is no annual commitment: you can use this facility once a month or never again. It’s your choice and its simple.
For mid-term loans of up to 5 years – inside knowledge on which of the 30 odd finance companies offering these type of loans is everything. Their marketing departments don’t tell you this, but they all have a different lending criteria, and this changes during the year, depending on the balance of their books.
What do Finance Companies Look at?
Put simply, finance companies look at the following:
- Credit rating
- Business sector, what you do
- Size and purpose of loan
Get any part wrong and you will pay more, sometimes double the interest rate.
Ah, but no problem I hear you say! I will apply to 5 businesses and pick the best rate!
It’s not that simple. In underwriting, at the last moment, they might well think “We are dealing with a time waster and we are really busy at this time of the year!” They really don’t like people shopping around and wasting their time. Or they will see several financial footprints and say “I better not approve this loan or play safe and charge a higher rate, as I might be asked later why I approved it when others did not.”
What Should I do Instead?
Why not just tell me what would ideally suit your business? I can tailor make a solution for you, as opposed to you choosing a finance company where you have to fit in with their offer. Besides why choose to join the queue at the front door dealing with a computer screen or form filler? I can just walk into the VIP area on your behalf, and deal with a senior person who I have known for years. Who do you think is going to get a better deal?
Good brokers get the best rates, full stop and finished.
Where I differ from some is that with so many types of finance available, I know my limitations. I do not say I am an expert at every type of finance, but I do have someone on my team who is that expert.
It has taken me years to be able do this, but when you love what you do, you meet good people along the way. You are always welcome to call me on my mobile 07710 466166.
Let’s talk today.
Very best wishes,
Mark Smillie