Most business owners approach their own bank first when they need funding. It is the obvious move. You have banked there for years, they hold your account data, and the relationship feels like it should count for something.
Increasingly, it does not count for as much as it used to. Understanding why explains where a broker fits.
Your bank is one lender with one appetite
A high street bank has a credit policy. That policy sets out which sectors it will lend to, which it will not, what trading history it requires, what security it wants and what it considers an acceptable balance sheet. If your business fits inside those lines, you may well get a competitive offer.
If it does not, you get declined. Not because your business is unfundable, but because it does not fit that particular bank’s criteria that quarter.
The criteria also shift. Banks adjust sector appetite in response to economic conditions, regulatory capital requirements and their own portfolio exposure. A sector that was welcome eighteen months ago can quietly fall out of favour without any announcement.
The lending market is much wider than the high street
Alongside the main banks sit challenger banks, specialist asset finance houses, independent lessors, invoice finance providers, bridging lenders, development funders and sector specialists who deal in nothing but agricultural machinery or commercial vehicles or medical equipment.
Many of these lenders do not deal directly with the public at all. They distribute exclusively through brokers, because maintaining a national direct sales operation makes no commercial sense for them. If you only approach lenders you can find on the high street, a significant part of the market is simply invisible to you.
Integrum Finance holds relationships with a panel of over 200 specialist lenders. That is not a boast about volume for its own sake. It matters because sector specialism is what determines whether a deal gets done and at what rate.
What sector specialism actually changes
Take a haulage business wanting to fund a used tractor unit with 400,000 kilometres on it.
A generalist lender looks at that asset and sees depreciation risk. They may decline it, or they may offer a short term at a high rate with a large deposit, because they do not know what the asset will be worth in three years and are pricing in their own uncertainty.
A lender that funds nothing but commercial vehicles knows exactly what that unit will be worth, knows the resale market, and can price accordingly. Same business, same asset, materially different offer.
The same is true across plant, agriculture, engineering, print, catering and healthcare. Getting to the right lender is often worth more than negotiating hard with the wrong one.
Applying to multiple banks yourself can backfire
There is a practical reason not to simply approach six lenders in succession.
Full credit applications can leave a footprint on your business credit file. A cluster of applications over a short period reads to a subsequent lender as a business shopping around under pressure, which affects how the next application is assessed.
A broker works differently. We understand each lender’s criteria before submitting, so we approach the ones likely to say yes rather than papering the market and hoping. Where possible, initial soundings are taken on an indicative basis before a formal application is made.
What a broker does beyond finding a lender
Sourcing the lender is the visible part. The less visible work usually matters more.
Structuring the proposal. The same set of accounts can be presented well or badly. A credit paper that anticipates the underwriter’s questions and addresses them upfront gets a better outcome than a bare application form.
Choosing the right product. Businesses often ask for a loan when what they actually need is invoice finance, or ask for asset finance when refinancing existing equipment would raise the money faster and more cheaply. Diagnosing the requirement properly comes before sourcing.
Managing the process. Underwriters ask for information, valuations are commissioned, documentation is issued. Somebody has to chase all of it. That is time you would otherwise spend yourself.
Being there next time. A broker who knows your business and your accounts can move faster on the second and third deal.
What it costs
This is the question people are usually too polite to ask first, so it is worth being direct.
Integrum Finance is paid a commission by the lender, calculated as a percentage of the total amount of finance taken. You are entitled to ask us to disclose the amount of any commission we receive on your agreement, and we will tell you. There is no charge for obtaining a quote and no obligation to proceed.
You may also be able to obtain finance directly from other lenders, and you are encouraged to seek alternative quotations. A good broker should be comfortable with you doing exactly that.
When your bank is the right answer
Honesty is more useful than a sales pitch here. Sometimes the bank wins.
If you have a long and clean trading history, strong security, straightforward requirements and an existing relationship manager who is engaged, your bank may well offer terms that are hard to beat, particularly on larger secured facilities.
The point is not that brokers always beat banks. It is that you cannot know whether your bank’s offer is competitive without something to compare it against. Getting a broker to run the market costs you nothing and either confirms your bank is offering good terms or shows you better ones.
Getting a comparison
If you are considering equipment, vehicles, property funding or working capital, we will run your requirement across our lender panel and come back within one business day with options. There is no cost and no commitment until you are satisfied with the terms in front of you.
Request a no-obligation quote or call 01604 264036.