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Benefits of using a commercial finance broker

With Easter over for another year, now is an appropriate time to discuss not having all your eggs in one basket for next year?

Almost every day we see lenders creating serious issues with companies who have their main trading account, invoice discounting , asset finance lines and property loan with one funder. Whilst there can be rare occasions when this is of benefit to you it is better for you to split your banking. 

One of the main reasons for having just one funder is that the owners/directors of business don’t want to have more than one relationship as they don’t have the time to manage multiple lender relationships. This is a valid point but the pitfalls can outweigh the advantages. Two examples seen recently: 

1 Wife of director had finance refused on a new car she was purchasing. Husbands business showed a loss through management information which was a condition of the bank’s overdraft facility. 

The Bank had advised all of its subsidiary companies of the loss, even though the next month it was back in profit. 

2 Client wanted to move his invoice finance line to another provider to provide more funds. Bank refused to allow this as they also had a property loan to the business and wanted to retain the invoice facility as additional security 

It’s becoming more common for companies to interact with their funders through a third party or commercial finance broker. Whilst your accountant could do the role owners/directors are turning to experienced finance professionals who understand how banks work. 

By anticipating any issues and working with all parties this improves the relationship with the funders and saves the owner/director considerable time which is better spent on running their business. This could be for a specific project or on a retainer basis.

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