Using a commercial finance broker can be a wise choice for businesses requiring a loan. However, some common myths surrounding finance brokers can be misleading and may prevent businesses from using their services. Here, we debunk some of the most common myths about finance brokers so you can make a more informed decision about using one.
Myth: using a finance broker is more expensive than dealing directly with a lender.
Reality: finance brokers often have access to a wide range of lenders and products, which can help borrowers access a wider range of rates and terms. Any brokerage fees can be offset by the savings that clients can achieve by securing the right finance product, not to mention savings in time and hassle by working with a broker to solve problems and navigate the process.
Myth: finance brokers only work with a select few lenders, so they may not offer the best options.
Reality: reputable finance brokers usually have relationships with numerous lenders, including major banks, challenger banks and alternative lenders. Having access to a broad market means they can provide borrowers with a diverse range of options tailored to their needs.
Myth: involving a finance broker makes the loan application process more complicated.
Reality: finance brokers are experts in navigating the complexities of loan applications and can streamline the process for borrowers. They handle paperwork, negotiations and communication with lenders, saving borrowers time and effort.
Myth: borrowers can apply to lenders for finance directly, so a finance broker isn’t needed.
Reality: finance brokers have access to lenders who are intermediary-only. Also, finance brokers have the expertise and know-how to structure a loan application for the greatest chance of success.
Myth: finance brokers are only for businesses with poor credit histories who struggle to secure loans independently.
Reality: finance brokers can assist borrowers across a broad spectrum of creditworthiness, from those with excellent credit to those with less-than-perfect scores. They can help borrowers understand their options and find lenders willing to work with their specific financial circumstances.
Myth: finance brokers don’t work with small businesses.
Reality: Finance brokers work with businesses of all sizes, from small startups to large corporations. They can help businesses in various industries and with a range of financing needs.
Myth: finance brokers aren’t regulated and may engage in unscrupulous practices.
Reality: legitimate credit brokers are authorised and regulated by the Financial Conduct Authority (FCA) for applicable loans and must adhere to strict professional standards and ethical guidelines. Brokers can also be members of trade organisations such as the National Association of Commercial Finance Brokers (NACFB), which ensures that their members meet their set standards.
Commercial finance brokers can offer valuable assistance to businesses seeking loans. If you’d like to see how ASC Finance for Business could help your business, please get in touch.
