The right Finance Broker for your Business Equipment is essential. This is like seeking the right Doctor for your medical condition. A Finance Broker is different to a Mortgage Broker just as a Neuro Surgeon is different to a Plastic Surgeon.
Acquiring new vehicles and equipment for your business is often a job that must be carried out effectively and efficiently. When purchasing a depreciating asset for your business it is important you finance the purchase and avoid utilising cash. However, with many options available finding the right one can be time consuming and take you away from the more important revenue generating tasks. Seeking the best loan and preparing financial documentation for approval is an additional task for time-poor small business owners.
A Finance Broker’s role is to arrange finance between an applicant and a potential lender. They will guide you and your business through the complexities of acquiring finance and ensure the process is seamless.
But how do you find the right Finance Broker for Business Equipment?
The following is a guide to assist with finding a Broker who can source finance for your business specific needs.
Word of Mouth
There is no better way to find a trusted service or product than by your family and friends. They will inform you about the process. From their experience you will develop an understanding of what to expect and pit falls to avoid.
Following research, arrange an appointment to meet with possible candidates. This meeting could be virtual, via phone or in person (COVID-19 permitting). It is important to take this time to ask any relevant questions. Treat your initial meeting as an interview after all this Broker will be working for you.
Be wary if the Broker rushes this meeting and talks incessantly. It will be imperative to have an understanding of your business requirements. The better they understand the business operation and financial position the more likely a successful credit submission.
Checking reviews and testimonials can help as well. Chose reputable sites to get accurate reports. Referrals can often be hard to obtain from clients. In our time-poor world, it is a credit to business owners when they take the time to give feedback. These comments can be commendable and an invaluable resource with your research.
Five Steps to find your Finance Broker for Business Equipment:
1. Check Broker is Credit Authorised
There are strict rules and regulations regarding lending and Finance Broker’s responsibilities. Make sure your Broker is authorised to provide lending services. Finance Brokers need to be a member of a professional industry association and hold either an Australian Credit Licence (ACL) Or Credit Representative Number (CRN). The Broker’s ACL or CRN should be easily accessible and/or advertised.
Ask if they are experienced in the type of finance you are looking for. Some Brokers will deal with a broad range of loan types while others specialise in specific areas. You may need a broker who understands and has expertise in finance for your industry and financial position. For example: if you are seeking finance to purchase an excavator, has the broker financed this type of equipment before? Understanding the asset securing the loan is essential for a majority of approvals.
3. Diverse Panel of Lenders
Brokers will be accredited with panel lenders who suit the client’s lending requirements. Does the panel consist of 1st tier (big four banks) and 2nd tier lenders? This will give more options and flexibility for your operations.
4. Good Communication
Since the Haynes Royal Commission, stricter and tighter legislation has been established. Borrowers capacity to meet the repayments and fully understand the loan contract needs to be ensured. Brokers will not only ask lots of questions but will listen intensely. They will take their time and will not be rushed.
5. Finance Broker Fees
The Finance Broker is not to be mistaken with a Mortgage Broker. A Finance Broker derives income via two different possible means. One is an origination fee or documentation fee. This is legally capped at $990.00. The other fee is a commission determined on a percentage of the wholesale base rate. For more information about Brokers’ fees check out next week’s blog on: “How Brokers are Paid!”
Managing Director – WillFinance Pty Ltd
Research is Time Well Spent
The right Finance Broker for your Business Equipment is essential. Brokers understand the lending policies and often have developed strong business relationships with lender’s key decision makers. These relationships can be imperative with negotiations and efficient processing times. It is important you feel confident with your choice of Broker. The right one can often save you time, money and frustrations. At the end of the day, your Equipment Finance Broker should hold the same qualities you would expect of your employees. They are knowledgeable, accessible and above all trustworthy. Your Broker will be able to competently assist with your finance.