Why you should use a commercial finance broker

January 3, 2018

At Just Business Financial Services we are not simply a finance broker since we know how important it is to specialise in the business industry. Small businesses have specific needs that are unique to their space. We know that for some, debt is not the most important part of their finance needs. We take care of business’ full business finance needs including transactional, business loans, asset finance, trade finance, foreign currency, debtor finance and merchant services.

Our extensive experience in the finance industry has taught us that small business clients want 3 things from their financial service provider:

  1. One business bank relationship manager for the life of their business

  2. Great service in regards to all banking products and services - not just the loans

  3. The best price for all the finance solutions

No one single bank can provide any of these finance solutions all the time.  At Just Business Financial Services, you are always dealing with the director and hence you will have one relationship point for the life of your business. Since we are not beholden to one bank or financial institution, you will always get the best price and service. Most importantly, however, we understand that for small businesses, lending and debt is not always the most pressing concern and so we specialise in loans, transactional solutions, foreign currency, working capital, advisory and all other facets of financial requirements that businesses have.

A commercial loan broker is just like any other broker you can think of. Whereas a real estate broker connects you with real estate, a commercial loan broker connects you with commercial loans. They are brokers who specialise in helping business owners and entrepreneurs to raise finance for their business. A commercial loan broker will take information about your business and apply to potential small business lenders. Going through a commercial loan broker could save you time, energy, and headaches.

Commercial lending policies aren’t as black and white as they are in residential lending, so it’s essential to have the backing of an experienced commercial mortgage broker, who will be able to ensure you get the best deal.

 

When you need business loans, and are thinking about just going through the process on your own, you have a lot of steps ahead of you.

 

It takes a lot of time to do all your research, figure out what your business needs, find the right lenders to apply to, negotiate the deals you end up getting, understand the terms of your options, compare all your deals to each other, and so on. You might be exhausted and overwhelmed just thinking about the business loan process.

 

The process of finding a business loan on your own is so complex that small business owners can spend weeks searching for the right business loan—and that doesn’t take into account the time it takes for your application to be processed when you actually apply to one.

 

There was a time when your only option was to speak to your own bank, but now there are numerous options.

 

Challenger banks, peer-to-peer lenders, specialist lenders covering niche areas such as bridging finance, property development finance, unsecured business loans, invoice discounting and asset finance.

 

And of course, within each niche sector there are numerous lenders all offering something slightly different.

Securing a business loan by yourself is doable of course, but can’t you just outsource it someone to do it for you?

 

Unlike a home loan to buy a residential property, commercial loans aren’t governed by the National Consumer Credit Protection Act 2001 (NCCP Act). That’s actually a good thing for you in that lenders can be more flexible with lending policy. The trick is trying to figure out what the bank wants to see in an application and trying to get a fair deal.

 

However, before you embark on choosing a commercial finance broker, there are some important questions that you need to ask:

 

Many brokers who claim they are specialists in commercial finance aren’t. Their expertise is as residential mortgage brokers or buy-to-let brokers or even life insurance brokers. They do commercial finance as a side line to their main business activity.

 

The result is, they are great at their area of expertise, but because they don’t specialise in commercial finance, they don’t have a full knowledge of the marketplace and what funding options are available.

As a minimum, they should have a Certificate IV in Finance and Mortgage Broking.

 

They should also be an active member of the Mortgage and Finance Association of Australia (MFAA) or the Finance Broker Association of Australia (FBAA).

If you use a broker who has PI insurance, you have the protection of knowing you have recourse if something goes badly wrong.

 

Fortunately, things seldom do, but if you use a commercial finance broker with PI cover it just gives you that extra protection.

 

Also, in order to get PI cover, the insurance company will have examined the brokers credentials before agreeing to put a PI policy in place, which gives additional “peace of mind”.

A good commercial finance broker should be “whole of market”. In other words, they’re not tied to one particular lender or to a selected panel of lenders.

 

Instead, they can go out to the entire lending market, research what options exist and then feedback to you so that you can make an informed decision knowing that your broker has gone out to the whole marketplace and not just to his “favoured” lender.

 

More choice in lenders means that you have a better chance of getting approved for a well-priced loan that suits your needs.

The law requires finance brokers to provide a client with their terms of business right at the very outset of the transaction.

 

The terms of business must include details of the fees the broker is charging to arrange the finance.

Be wary of using any broker who is “cagey” about telling you what they charge.

Also ask them about the other fees that you are likely to incur, such as: bank arrangement fees, legal costs and valuation fees.

 

It means that you know exactly what the costs of arranging your finance will be right at the very outset.

 

Commercial brokers understand the nuances of business. The understand your goals in buying a commercial property, whether you’re after a strong rental return or your strategy is capital gains. They even deal with business owners looking to buy their own premises.

 

They can’t advise on where and when to buy property but they can help you to achieve your goals.

Once they get your regular business, the banks regard you as hooked. If you are a loyal customer with multiple accounts and loans, they’re less likely to offer you the best deals on any new lending. By going straight to your regular bank to discuss a new commercial loan, you can be sure that you’ll be overcharged.

 

They can compare many different lending options from a number of different major banks and second-tier lenders.

 

These days there are a lot of alternative lenders you can look to for financing for your business—commercial banks aren’t your only option anymore. You may find that Australia’s non-banks are more competitive than the major banks when it comes to pricing and accepting unusual commercial properties (security types) or commercial funding needs.

 

Some lenders work exclusively with brokers and rely on them to be the gatekeepers to bring them suitable clients.

 

"Some lenders work exclusively with brokers and rely on them to be the gatekeepers to bring them suitable clients."

A finance broker can compare all the different loans from different banks and other lenders that a lot of people won’t have even heard of. You will be able to see exactly what the market has to offer, and get a clear picture of the associated costs, from interest rates and entry fees to ongoing charges. By comparing the savings, you’ll have the peace of mind of knowing you’ve got the best deal possible.

 

You should expect to pay an interest rate premium for a commercial property loan but it’s important to understand that the rate and the amount you can borrow (your Loan to Value Ratio) aren’t set in stone. Each bank has it’s own LVR requirements and servicing needs. In fact, banks don’t even advertise their rates to the public!

 

It’s because of this ability to negotiate that, strangely enough, sometimes the interest on commercial finance is lower than the standard homeloan.

 

Did you know that certain types of commercial properties like farms and bed and breakfast (B&Bs) can actually be financed at residential rates?

 

It comes down to an experienced commercial mortgage broker with the credit skills and relationships with the business development managers at the bank to get you a great deal.

 

It’s because of this ability to negotiate that, strangely enough, sometimes the interest on commercial finance is lower than the standard homeloan.

 

Unlike some rigid residential home loans, commercial lending is more flexible. An experienced commercial mortgage broker will have strong relationships with their lenders, know their products inside out and be able to negotiate on your behalf. There are a lot of loan-structure options to explore and every one of them has the possibility to secure you a fairer deal and save you money.

A good commercial broker is with you from application to settlement and beyond.

That means less stress for you so you can focus on continuing to look at other investment opportunities or, better yet, focus on your business.

The emotion of purchasing a dream family home might not be there with a business transaction, but in many ways it is a more complicated process. Just because you own a business doesn’t mean you know everything about business financing. So when you’re confronted with some foreign financial terms on your loan offer, you might not be able to fully interpret everything. Invoice financing versus invoice factoring? Business credit versus personal credit? It can get a little confusing. Commercial loan brokers will be able to explain all the complicated words and acronyms that will be attached to your loan offer. Your broker will help to smooth proceedings, by offering help and guidance at every step of the way and by dealing with any other involved parties – accountants, lawyers and estate and buyers’ agents.

 

Brokers are obliged to have a qualification or be accredited by experience. they are full time professionals, experts in their area.  They constantly study all relevant markets and receive regular updates from various lenders.

Any investment is always about future returns, and your commercial mortgage broker will be by your side for the long haul. Unlike home loans that can be sit and forget solutions, business finance is an always evolving beast.

 

They will play an integral part in your professional team along with your accountant and your solicitor.

As you and your business needs change, you can focus on living your life and getting on with business while your broker will ensure that your loan remains competitive.

 

All too complicated?

 

Running a business is hard enough, if you want some advice on you can take advantage of this type of funding, feel free to contact us.

 

At Just Business Financial Services we provide a holistic approach in providing all your financial needs. Having strong affiliations with a wide range of lenders and providers, including the Big Four banks, we can provide our customer with the best service possible.  This puts our specialists in the position to not only find you the best deal, but also the right structure for your business.

 

When it comes to your business' finance, having the right person there by your side is essential to grow your business. Being FBAA accredited, you can trust you are in good hands with Just Business Financial Services.

 

Unlike dealing with the banks, at Just Business Financial Services it is comforting to know you only have to deal with one consultant for all your business financial needs.  We, at Just Business, provide your business with all the finance and insurance support it requires to keep it moving in the right direction.

 

Our approach is 'We take care of your Finances, so that you can take care of your Business'​.

 

Other articles you may find interesting:

 

   

Commercial and Business Loans

Business loans are the primary source of funding when you need the money for a term longer than 1 year. They be secured by traditional residential or commercial property, “non-traditional” assets as well as the business itself. READ MORE >

 

 

 

Asset Finance

There are many types of asset finance offered by banks. Choosing the right option has both cashflow and tax implication. READ MORE >

 

 

 

 

 

 

 

 

 

 

 

 

 

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