Finding the right finance for your business
Finding a source of funds for a new business venture or
to expand into new activities has always been difficult for
business proprietors ú even more difficult if the new venture
starts to run into financial difficulties.
Historically the high street bank has always been the main
source of funding for businesses, but bank reorganisations
and the demise of the traditional bank manager seems to have
had a negative effect in some parts of the business community;
as a consequence we are now seeing growth in the use of a
business broker to fill a gap. This is a trend that has emerged
in other parts of the world ú in the USA some 80% of commercial
financial transactions are handled by brokers ú in Australia
the figure is 40%, and doubled over the past 5 years; in
the UK the use of the broker now runs at 20% and is growing
fast!
Of course it would be wrong to suggest that the bank reorganisations
have led to the growth of the commercial broker in the UK.
The UK financial market has been subjected to the competitive
activities of the global players that have set up shop here ú some
have less rigorous procedures and some fund new markets ú but
the fact remains that they are very active and they promote
themselves well.
Banks historically always paid close attention to a clientsç character,
the capability of the business and the capital invested and
traditionally lent pound for pound on a secured basis. The
new lenders are less interested in the clientsç available
capital and focus on the business project and the plans for
the business. They also fund a whole range of activities
that the high street lenders have shunned.
The choice of lender now is so large that it makes it difficult
for the businessman to select the right lender for his business
opportunity or even his business problem ú and thatçs where
the broker comes in. Because he is active in the market he
is able to match a business finance requirement to the organisation
that most suits the client needs.
Costs? As you can expect interest rates vary with the level
of risk undertaken by the lender in the clients business
or project. The broker generally gets an introductory fee
from the lender and so there should normally be no additional
fee for the client to pay the broker. Security? Of course ú but
the procedures appear to be clear and straightforward. Speed
of response? Very quick, you can be impressed.
Our commercial broking division is headed up by Steve Dunwell,
a seasoned banker, who has spent all his working life in
business finance. He handles a wide variety of financial
activities ú commercial mortgages, finance for business growth,
start-ups, as well as refinancing for businesses with emerging
problems. If you think you need some assistance with your
business plans you can speak to Steve at P&A Lender Services
on 0114 278 8868.
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