When the Bank Says Yes, as Well as When the Bank Says No – Why SME Owners Should Talk to a Business Finance Broker
When it comes to business finance, the common mantra among commercial finance brokers is that they are here to help when the bank says no. While that’s certainly true, there’s another important point to consider: business finance brokers can provide valuable guidance and insight even when the bank says yes.
In fact, the moment your bank approves your loan application might be just the time you need expert advice the most. SME finance isn’t just about securing a term loan; it's about choosing the right finance solution that aligns with your business’s cash flow, growth, and need for flexibility.
Why Bank Financing May Not Be Enough for Your Business
While it’s great that your bank has agreed to lend you the funds you need, it doesn’t always mean that the finance solution is the best one for your business. Here’s why:
Inflexible Repayment Terms: Traditional bank loans often come with fixed repayment schedules that may not suit the seasonal or fluctuating nature of your business. Alternative finance options can often offer greater flexibility, allowing you to repay based on your cash flow cycle.
Paying Interest on Unused Funds: Banks typically approve a loan for a fixed amount, but why pay interest on the full loan amount when you only need to borrow a fraction of it at any given time? With a revolving credit facility or line of credit, you only pay interest on the amount you actually use, saving you money.
Limited Growth Flexibility: You might get a loan that fits your current needs, but what happens if your business outgrows it? If you exceed the projected growth in your forecast, your bank may not automatically extend or adjust the loan facility. You could find yourself back at square one, trying to convince the bank to increase your borrowing limit.
Approved for Less Than You Need: Your bank might approve a loan for a lesser amount than you requested, leaving you short of the working capital you need. This could be due to the bank's underwriting guidelines, which may not account for the full value of your business’s asset base or potential.
Inflexible Invoice Finance Terms: If you’re relying on invoice finance, the bank may offer you a facility based on your whole debtor book. However, what if your need for invoice finance is driven by only a small number of debtors? With alternative finance, you can often borrow against selected invoices, giving you more control over your financing.
Why You Need a Business Finance Broker – Even When the Bank Says Yes
Even when your bank says yes, an experienced business finance broker can help ensure that the financing structure truly fits your needs. Brokers have access to a wide range of alternative finance solutions, such as:
Revolving Credit Facilities: Flexible funding that grows with your business, allowing you to borrow and repay as needed.
Lines of Credit: A more flexible option compared to traditional term loans, perfect for managing cash flow gaps.
Flexible Revenue Based Business Finance: A financing solution tied to your revenue, offering a tailored repayment schedule.
Short Term Cash Flow Funding: Quick access to working capital when your business faces temporary cash flow challenges.
Long Term Business Loans: Loans with more favourable terms than those high street banks may offer, designed for sustainable growth.
Single Invoice Finance or Spot Invoice Funding: Finance options allowing you to borrow against specific invoices, instead of the entire debtor book.
These solutions are designed to provide greater flexibility, helping your business grow at its own pace without being restricted by the rigid terms of traditional bank lending.
The Value of Working with a Commercial Finance Broker
Just because the bank has approved your loan doesn’t mean you have the best deal. A skilled and experienced business finance broker has access to a broad portfolio of private lenders and alternative funders who can offer more flexible and tailored finance solutions than those your high street bank can provide.
At Tor Business Finance, we work with a diverse range of lenders, meaning we can help you find the right funding structure to match your business’s unique needs. Whether you need a small business loan, a cash flow solution, or a flexible financing option, we can help you navigate the options and secure the most suitable funding for your business.
Conclusion: Don’t Compromise! Don’t Settle For "Just Enough" – Explore Your Financing Options
In the world of SME finance, settling for whatever your bank offers may not be the best approach. Whether the bank says yes or no, it’s always worth speaking with a commercial finance broker who can provide you with the right advice and the most flexible funding solutions.
If your bank has turned you down, or even if they’ve approved your loan, Tor Business Finance can offer the guidance and options that work best for your business. Don’t leave money on the table—speak with us today to explore how we can help you find the perfect commercial finance solution for your growing business.
