Benefits of working with a broker to access commercial funding

The benefits of working with a brokerIn this guest post, PMA referrer Gus Gilkeson, Managing Director of Grow Capital, writes about the benefits of working with a broker for small-to-medium businesses when trying to access commercial funding.

Obtaining funding for your small-to-medium business can be hard work. It takes a ton of time to do all that research, analyse your business needs, find a respectable lender, negotiate a deal you can live with, understand the terms of your financing, etc. That’s why working with a broker can be a really great idea. Brokers match up business owners and business lenders so that you can get the best outcome for your business. A broker could save you time, energy, and money, if you consider the costs of searching on your own.

Top 5 benefits of working with a broker:

Here’s five reasons you should consider working with a broker to access funding for your business:

1. Get the best rate. Brokers will work with lots of different lenders so that they can find the best rate possible for your financing.

2. Get the best solution. Sometimes it’s not just about getting the cheapest rate. A good broker will understand that getting the right solution is most important. For example, a short-term loan might be the best option. Your broker can help you look at alternatives to the banks that can offer specialised short-term finance.

3. Don’t sweat the details. This goes hand-in-hand with not wasting your time and effort. The point is that you can focus on running your business while your broker works on funding it. The nitty gritty? Let the professionals handle it.

4. They’re experienced. The best brokers have relationships with an extensive network of lenders and getting good deals is often all about having the right contacts. Plus, they’ll be able to tell quality deals from highway robbery — they’ll have seen it all before.

5. They’re knowledgeable. The finance world can be a confusing place with all the jargon and acronyms. However, a good broker would be in the know and could explain all the complicated terms and help you to navigate through the borrowing process.

Gus Gilkeson - Grow Capital

 

Gus Gilkeson is the Managing Director of Grow Capital where he helps Australian business owners, investors, and individuals harness their capital growth opportunities through funding.

Banks now more lenient for SME loans, but still not as flexible as private lenders

Private lenders are more flexible for SME loansA recent article from Australian Broker stated that Australia’s major banks have introduced more lenient lending criteria to make it easier for small and medium-sized enterprise (SME) owners to purchase property.

Westpac announced it would increase its loan to value ratio (LVR) from 80% to 90% following similar changes from Commonwealth Bank earlier in the year. Westpac, CBA and St. George also all announced they would only require one year of financial records as income verification for self-employed borrowers. Previously they had required two years of financial records and tax returns.

SME loans need flexibility

While it’s great that SMEs now have more opportunities to access bank funding, they are still required to show serviceability which isn’t always possible. Similarly, for businesses that need quick turnarounds and short-term funding, a bank still isn’t going to be the right source for funds.

The difference between a bank and a private lender is that a bank focusses on serviceability while a private lender focusses solely on asset value and exit strategy. At Private Mortgages Australia all our loans come with a component or prepaid interest so we don’t need to worry about serviceability. This distinction is the main reason PMA is able to service so many SME loans for short-term finance.

If you have an SME client who can’t get funding from the banks, give PMA a call.

By Tony Barbone

Managing Director, Private Mortgages Australia