While a bank may be your primary financial provider, what do you do if they say no to your funding request?
A no from a bank is not always about your creditworthiness or ability to service a loan. It could simply be the banks propensity (or not) to the nature of the lending that is best for your situation.
Take for example invoice factoring. This is not specifically a traditional bank’s domain and so your options may be better served through a finance brokerage.
A finance brokerage is not tied to one lending product or company.
They instead have relationships with multiple lenders (banks and non-banks), who each have their own range of financial products and rates, fees and lending criteria.
The brokerage works through these factors on your behalf with the lenders to find you the best deal for your business.
Typically, a finance brokerage can source funding beyond traditional finance facilities including asset lending, invoice factoring and working capital.
The broker does the work for you – saving you time in sourcing the best deal for your situation – and will take a success fee (that is agreed upfront with you) should you accept the offer and take up the finance.
Sometimes a second tier facility may be the best offer your finance broker can find for you, particularly if the bank has said no because of your credit profile.
A second tier loan may be a more expensive option in the short term, but it can allow you to get on with your business goals and give you breathing space to show the bank that you are a worthy risk, thereby returning to a cheaper first tier option.
There are a myriad of brokerage companies within New Zealand. If you are looking to partner with a finance broker, be sure to check they are a registered Financial Services Provider (FSP).