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How to get the right financial advice

Most businesses will, at some point, need to access finance. Many business owners will go straight to their existing bank to try to arrange a loan, an overdraft or a commercial mortgage. But there is an alternative.

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All businesses will, at some point, need to access finance. But new research has shown that one in ten businesses is unsure of where to get financial advice. Whilst many will go straight to their existing bank to try to arrange a loan, an overdraft or a commercial mortgage, there are alternative sources of financial advice such as commercial finance brokers. Here we tell you how to choose one for your business. Save time – and money Broking is a growing industry across all areas of business finance. Many business owner-managers are becoming much more savvy and outsource their financing to a specialist, which, in turn, allows them much more time to manage the day-to-day running of their business. So-called ‘shopping around' for the best deal has become increasingly common across all areas of personal and business life. One of the main advantages of using a broker for sourcing your business finance is that they will do that shopping for you. An old-fashioned approach? Dealing with an individual can be a rather appealing idea. A broker is someone who will take the time to understand you and your business and offer a personal one-to-one service tailored to your business needs. A broker can answer any problems or queries you might have and, in a world of call centres, speaking to a real person who is able to answer your query is something which a broker's clients value highly. And if your broker understands your business and your requirements, they are in an excellent position to secure you the best and most suitable deal. Never assume The finance you think you need may not be the finance you actually need. This is another area where a broker can help. Although you may think that you need a loan to buy your equipment, or an overdraft facility to help with your cash flow, a good broker will explore all the finance options with you and find you the best deal for your business. For example, instead of choosing a business loan to buy your equipment, a broker might recommend a leasing arrangement as more suitable. Perhaps, instead of a traditional overdraft, the flexibility of a factoring arrangement will give your business the cash injection it needs. Understanding Many brokers run smaller businesses themselves, so they understand on a first-hand basis what it means to be the owner manager of an SME. This insight can often give them a good idea of the kinds of finance that will work – and ones which won't. It also means that a broker is more likely to empathise with your position and needs – the chances are they've been there themselves. Get expert advice Commercial finance is a complicated subject. Unlike standard residential mortgages, which have neatly defined rates and criteria, commercial finance is much more tailored and requires a good degree of skill and experience to find the right deal. In other words, if your business needs finance, you would be wise to seek professional advice. A good finance broker will be able to help you get the right kind of finance for your business. Brokers who are members of the National Association of Commercial Finance Brokers (NACFB) all adhere to an industry recognised Code of Practice, so if you use a broker with the NACFB logo, you know you'll be getting good advice. About the author Nikki Cann is Associate Director of the National Association of Commercial Finance Brokers (NACFB). Visit www.nacfb.org.uk for a full list of member brokers. To find out how the Forum can help you access alternative sources of finance and financial advice, call us on 0845 130 1722. Source: RSM Tenon, 2011

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