It’s a question I am regularly asked.
Of course, anyone who tries to define what is best – without first discussing specific needs and circumstances is unlikely to be giving great advice. So, to answer a slightly different question:
The first place you should go is your bank. Yes, I’m a broker but despite all that you read, the banks are there to lend money – and if they want to lend you money they will do all they can to secure the deal. You don’t have to take what they offer, but it is a great starting point.
It might be that your bank decline you, or put onerous terms on the table. Don’t be disheartened, as often as not it simply means that on a portfolio basis you don’t match their requirement at this time. In other words, some detail of your proposal has triggered an automatic no – it could be your industry sector of some little glitch hidden in your past record.
That is when you need to explore alternative lenders. There are a lot of them out there! The Government has currently nailed it’s flag firmly onto Peer-to-peer lending or ‘crowd funding’.
There is nothing wrong with P2P – in fact there are some great products, but it represents just 5% of the alternative market – and tends to focus on better or more straight-forward deals.
It is wonderful that there are so many alternatives out there, but to the uninitiated it can be confusing and potentially waste a lot of time. Particularly when you take into account the number of brokers who want to pretend to be lenders (something the FCA are currently challenging).
This is the point where you might want to turn to a broker. A good broker – before making any promises – will seek to understand all about you, your business, circumstances and needs before advising on the most appropriate product and the best source of funding for you.
Most brokers are good – a few aren’t. It is sometimes hard to define them, however some key questions would be:
- Do they ask real questions or just make big promises?
- Can they speak with knowledge about a range of products, or do they just spout generic ‘benefits’?
- Do they point you towards another professional if they aren’t sure, or do they just ‘wing it’?
I’m biased, but I think I’m a very good broker, and can at least support this by taking a genuine interest in your business and getting the right facility for you.
After you’ve spoken to your bank, of course.
Funding Portal provides alternative funding to small businesses in and around Surrey.
Cashflow Consultants helps small businesses in Surrey to understand & take control of their cash.