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!
I hope you are well and weren’t affected too badly by Storms Ciara and Dennis? Residents of the Smillie household were lucky enough to emerge relatively unscathed. We did however suffer significant damage to 2 of our fences (along with some boiler issues). Fortunate compared to some I know… but still costly! Why am I telling you this? Well… because it suddenly occurred to me! My own failure to prepare for a situation like this actually holds the answer to one of the questions I get asked the most:
“What piece of advice would you give to a Company Director to get the best rates”?
Well in short… they should do what I should have done with my fences! My fences swayed in high winds – but I didn’t do anything about it. If I had had them strengthened prior to the storm – I would have saved myself a great deal of money! Instead, I left them until I had a problem. So what’s the moral of the tale?
Try and Secure a business loan before you need it!
In most cases, a company director knows that they’re going to need finance some weeks or even months before they actually go out and arrange it. This might be for a myriad of reasons, but the point I am trying to make is that you normally know you are going to need finance in advance.
In the last stage of a financial application for a business loan, the underwriter will look closely at the underlying trend of your last 3 months bank statements. They look to see if it is stable, going up, or gradually tightening. If it is the latter, this can make the difference between you being offered an interest rate at 10% or 5% if you had applied earlier.
Due to time pressure and work demands, it is easy not to prioritise your business finance. However, it can be so easy to do so if you use a good broker!
In the worst cases it can result in catastrophe.
Don’t believe me? Well let me illustrate a recent example for you. A client came to us and said they were expecting to hit a significant short term dip in about 6 weeks time. We arranged finance… I think at just under 10% – but they wanted it cheaper.
We explained why that would not be possible and let them know that they had been offered a very good deal. However, they made a terrible mistake. They went off and made several applications with other finance companies, despite us warning them about the issues that this might cause. Well they came back to us a month later to accept the original deal. Unfortunately, the offer had expired and they had to reapply.
The underwriters then saw that the cashflow was dipping badly. They refused any type of finance unless the Directors would secure this on their properties.
The wives of the directors refused and the company went needlessly into liquidation, curtailing the family income. A catastrophic tale – and easily avoided.
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. However, I do have someone on my team who is that expert!
It has taken me years to have this wonderful team supporting me. 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,