This article was recently published on LinkedIn Pulse by Credit One's New Zealand Manager, Lani Fogelberg.
The world of small business finance can be a tough one to navigate. There is a seemingly endless stream of TV and radio ads touting new lenders who have entered the market in addition to the major banks and financial institutions, and with so many factors to consider when you're in need of finance the task of applying can be daunting.
Your most precious currency - time - gets spent poring over website fine print as you try to figure out just exactly how much that new equipment/truck/car is going to cost your business, when you'd rather be out there working, doing whatever it is your business does best. Sometimes, the time spent navigating the world of small business finance is even enough to put you off buying what you need.
Fortunately, finance for your small business simply does not have to be hard.
There are some everyday measures you can take within your business to ensure that it's smooth sailing come the time you need to borrow, and engaging the services of a broker to oversee the application process for you can make the whole experience of borrowing a much better one. Let me explain..
As a small business owner, ensuring you pay your bills on time and addressing any discrepancies or disagreements with creditors as soon as they arise is fundamentally important. This doesn't just mean your business costs though - this rule extends to you, personally, as the owner and director of your company. Long gone are the days of lending to a business based purely on its financial strength alone - as the business owner you're going to be examined as well, which means that a forgotten power bill or argument with your cellphone provider could affect your company's ability to borrow, or the cost to do so.
Keeping tabs on the business's financial performance is important, too. If you were lending money to someone, you would want to know that they were being paid regularly and living within their means. Likewise, a financier wants to know that your business has the cash flow to be able to repay what you borrow. Although they are not always absolutely necessary, annual financial accounts and even interim reports throughout the year not only help you understand what's going on in your business, but mean you have the information required, ready and waiting if a lender requests it.
The time trap I mentioned earlier. What lender should you approach? Should you talk to your bank? Will they take too long? How will a lender serve your needs as a small business owner? What are the terms, rates and pricing? Will you get an approval back before you miss out on the equipment/truck/car being sold out from under you?
These are just some of the questions you'll be researching the answers to when you embark on the finance application process and it can be a confusing adventure. It's this reason that I am so passionate about the broker model and the service that Credit One provides to small business owners.
Engaging a broker suddenly makes small business finance easy.
After a short conversation with you, a broker can generally answer all of the above questions and shed light on any other pressing questions you have. Just like you're an expert in your field, we spend every day dissecting the ins and outs of what lenders are offering and can easily match your business to one that will work for you, and negotiate on your behalf. You could almost think of it like matchmaking - you wind up with the perfect partner, without all the hassles of dating!
The speed and convenience offered by a broker who's committed to serving small businesses is unprecedented too, and harks back to when bank managers knew you by face and vice versa. If your business operates in a noisy environment, in a factory or out on site, you might find it easier to communicate by text during the day. Is your only chance to talk finance at 7pm when your day has finished? No worries, you can reach your broker on their mobile. Chances are if you need $120,000 in 24 hours to pay for a truck you'll otherwise miss out on, we'll pull out all the stops to get it done for you - quoting a recent example.
Lastly, consider the transparency that comes with engaging a broker. Some financial products take more time to arrange, and a broker will never beat around the bush to tell you otherwise. Your expectations are realistically managed and you are kept fully informed throughout the process. If we see that your business could benefit from moving some borrowings to a different lender due to their terms, fees or rates, we'll say so. For us, we care more about supporting our clients and looking after their best interests than simply writing as many loans as possible and meeting targets. What I get in return personally for serving Credit One's small business clients is a fascinating insight into what makes the wheels of a business turn, and the satisfaction that our team has helped a client do what they do best for their clients, even better.
For large businesses with multi-million dollar funding lines, direct relationships with financiers are practical and well-catered for by the major banks. Although they're businesses we work with in certain scenarios too, it's the small businesses making up such a large part of our country's economy whose experience obtaining finance can be made so much easier with the right preparation and guidance. Hard? I think not.
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