Finding a source of funds
for a new business venture or to expand into new activities has
always been difficult for business
proprietors – even more difficult if the new venture starts
to run into financial difficulties.
Historically the high street bank has always
been the main source of funding for businesses, but bank reorganisations
and the demise of
the traditional bank manager seems to have had a negative effect in
some parts of the business community; as a consequence we are now seeing
growth in the use of a business broker to fill a gap. This is a trend
that has emerged in other parts of the world – in the USA some
80% of commercial financial transactions are handled by brokers – in
Australia the figure is 40%, and doubled over the past 5 years; in
the UK the use of the broker now runs at 20% and is growing fast!
Of course it would be wrong to suggest that
the bank reorganisations have led to the growth of the commercial broker
in the UK. The UK financial
market has been subjected to the competitive activities of the global
players that have set up shop here – some have less rigorous
procedures and some fund new markets – but the fact remains that
they are very active and they promote themselves well.
Banks historically always paid close attention
to a clients’ character,
the capability of the business and the capital invested and traditionally
lent pound for pound on a secured basis. The new lenders are less
interested in the clients’ available capital and focus on the
business project and the plans for the business. They also fund a
whole range of activities that the high street lenders have shunned.
The choice of lender now is so large that it
makes it difficult for the businessman to select the right lender for
his business opportunity
or even his business problem – and that’s where the broker
comes in. Because he is active in the market he is able to match a
business finance requirement to the organisation that most suits the
client needs.
Costs? As you can expect interest rates vary
with the level of risk undertaken by the lender in the clients business
or project. The broker
generally gets an introductory fee from the lender and so there should
normally be no additional fee for the client to pay the broker. Security?
Of course – but the procedures appear to be clear and straightforward.
Speed of response? Very quick, you can be impressed.
Our commercial broking division is headed
up by Steve Dunwell, a seasoned banker, who has spent all his working
life in business finance. He
handles a wide variety of financial activities – commercial mortgages,
finance for business growth, start-ups, as well as refinancing for
businesses with emerging problems. If you think you need some assistance
with your business plans you can speak to Steve at P&A Lender
Services on 0114 278 8868.
< back
to News headlines
