Being a Business Finance Broker
You work long hours, on tight margins and serve much valued clients. You nurture these relationships over years and in some cases become an extension of their business. This is the life of a business finance broker.
You’ve seen your SME clients prepare their agonising finance applications to one of the big 4 banks only to get rejected based on a lacking cash flow history. Some may have been selectively accepted but only after putting their own homes up as security.
Across town sits another type of lender. The type with fully automated loan processes and double digit interest rates. These interest rates are compounding, so the further behind the small business owner is on repayments, the tighter they are in the grips of this online finance provider.
You get frustrated. You see your small business clients stuck in a race that is far from the run they anticipated they would have when they decided to become entrepreneurs. Here are three ways to navigate around your client’s financial traps:
Work out whether a bank is a realistic option
Your job as a business finance broker is to save your client time and hassle. You make a quick assessment of their likelihood of coming through a bank loan application with their sanity and business opportunity still intact. There is no doubt that banks can offer more competitive interest rates than non-bank lenders. After all, they draw their funds from Australian bank account deposits! But time and effort may swiftly close the window of opportunity for this SME.
Check the fine print
Some non-bank lenders, often online-based, charge interest rates that can end up nearing 50% across a year. If your client repays their loan early there are fees or interest charged without concern for the repayments already made.
Small business owners are entrepreneurs, they are risk takers. Use your relationship and experience to help them navigate the financial traps that can end up choking their cash flow and making them a borrower for life.
Cast a wider net
While your business is run on tight margins, it’s only as strong as your relationships with your clients. The market is changing rapidly so there are at least three options for your SME clients. There is the bank, FinTech and a finance partner.
Banks are great if the client has time and plenty of paper work to prove their low risk profile. FinTech is great if you are looking for a no-brainer, fast loan. A finance partner is the right decision if you are looking for a provider who is faster than the bank and fairer and more personal than many FinTech companies out there.
Funda has been in business for five years now, we’ve lent tens of millions of dollars to clients across Australia. We would appreciate the opportunity to get to know you and your clients to help them grow and free them up to focus on their business.
This month we have a special offer for new Broker clients who would like to see how we can work with their clients in a fast and more fair way. Learn how we can help business finance brokers like yourself look after your SME clients. Contact us today.