But how do you find the right one?
Recommendation from a trusted advisor is always a good start, testimonials is another, but what if you have none of these and are left to find your own from the several 1000’s that exist in today’s marketplace?
I have provided a number of searching questions below that a quality brokerage should be able to answer and will give you an early indication of their ability to provide the funding solution that you are looking for.
Key questions to ask your broker: –
- Does the broker have access to the whole of the commercial market for the finance that you require?
This way you can ensure that you are receiving a balanced view of your finance requirements across a market wide offering and not just from a restricted panel of funders.
- Is the broker a member of a recognised association such as the National Association of Commercial Finance Brokers [NACFB]?
Unlike the domestic mortgage market which his heavily regulated, the commercial funding market is not regulated by the FSA. Therefore brokers who are members of an association like the NACFB should be able to demonstrate quality systems and procedures when it comes to processing your applications.
- How will the broker be paid and what will be the total fees charged for arranging the finance?
Some lenders will pay an introductory commission to the broker for facilitating the funding for you. Depending on the level of work needed to be completed on your proposal it may be necessary to charge additional fees separate to any commission. These should be declared from the outset so that you know exactly what the true cost of arranging any funding is.
- Does the broker have professional indemnity insurance?
Arranging commercial funding is not just about securing finance, it can be the difference between success and failure of a business. Therefore getting the wrong advice can be devastating, ensuring that your broker carries adequate insurance should you need to make a claim is essential.
- Do they have a consumer credit licence
To comply with the requirements of the Consumer Credit Act 1974, your broker must have a credit licence to carry out certain activities in the fields of consumer credit and consumer hire.
- Are they registered for data protection with regards to handling private information about you and your company?
The Data Protection Act 1998 requires every data controller who is processing personal information in an automated form to notify, unless they are exempt. Failure to notify is a criminal offence. Register entries have to be renewed annually. If you are required to notify but don’t renew your registration, you are committing a criminal offence.
Goodman Corporate Finance is a full member of the NACFB and Paul Goodman; our Managing Director is a current acting board member of this association and is helping to lift the bar when it comes to quality practices in the commercial funding arena.