A loan broker can help a business assess its financing requirements, identify suitable financing routes, approach relevant lenders and manage the financing process through to disbursement.
The value is not simply in submitting an application.
It is in understanding the business first, then determining how the financing should be structured and where it should be placed.
What does a loan broker actually do?
A business financing broker should start by understanding the company and what it is trying to achieve.
This includes looking at:
- Company financial position
- Existing loans and liabilities
- Company vintage and industry
- Ownership and Personal Guarantee structure
- Amount of financing required
- Purpose of the financing
- Available financing facilities
From there, the broker can determine which financing routes and lenders may be suitable for the case.
Why does lender selection matter?
Different lenders have different credit criteria, lending appetites, industry restrictions and financing limits.
One lender may be suitable for a particular business while another may have restrictions that make the case unsuitable.
This becomes even more important when a company is looking to raise a larger amount or has more than one financing requirement.
Rather than treating every bank as the same, the financing strategy should be built around the company’s actual profile and requirement.
Structuring the financing
The financing product also matters.
Depending on the business, the appropriate route could include:
- Working Capital Loan
- Business Term Loan
- Invoice Financing
- Supplier Financing
- Equipment or Machinery Financing
- Property Financing
- Other business financing facilities
The objective is not to force every company into the same loan.
It is to determine which facility is appropriate for what the business is trying to fund.
Managing the application
Once the financing route has been determined, there is still the application process to manage.
This can involve preparing the required documents, coordinating with lenders, responding to credit queries, providing additional information and following the case through the approval and documentation stages.
For business owners who are already managing their operations, having one party coordinate the financing process can make the process considerably more straightforward.
At Cornerstone Capital Services, we manage the case from the initial assessment through the application process and continue coordinating with the relevant lenders through to disbursement.
What about the broker’s fee?
A financing broker charges a fee for the work involved in assessing, structuring and managing the financing application.
At Cornerstone, our brokerage fee is success-based, with no upfront brokerage fee to begin the assessment.
The exact fee depends on the complexity of the case and the financing arrangement.
When is a broker most useful?
A broker can be particularly useful when a company:
- Wants to raise a larger financing quantum
- Is unsure which financing facility is most suitable
- Has existing facilities with one or more banks
- Needs to consider multiple financing routes
- Wants to approach more than one suitable lender
- Does not want to manage the financing process alone
The more complicated the financing requirement, the more important it becomes to look at the overall financing strategy rather than one loan application in isolation.
What we do at Cornerstone
At Cornerstone Capital Services, we take a business-first, lender-second approach.
We assess the company’s financial position and financing requirement first, then determine which financing routes and lenders may be suitable.
Where appropriate, we can consider multiple lenders or different financing facilities as part of the overall financing strategy.
There is no guarantee of approval. The final decision, quantum, tenure and pricing are determined by the relevant financial institution.
Our role is to assess the requirement, structure the financing approach, coordinate with suitable lenders and manage the process through to disbursement.
Is a loan broker worth it?
For a company looking to raise business financing, the value of a broker comes from having someone who understands the financing landscape and can manage the process around the company’s actual requirement.
You are not simply paying someone to submit documents.
You are paying for the assessment, financing strategy, lender selection, application management and coordination through to disbursement.
Speak to us about your financing requirement
If your company is looking to raise financing, send us your company name, approximate amount required and purpose of funding.
We can assess the profile and determine which financing routes may be worth considering.
