Commercial finance brokers

Commercial finance brokers will arrange everything from business loans to commercial mortgages.

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Commercial finance brokers

When it comes to lending, a commercial finance broker is a cornerstone in the market, connecting business owners looking to secure funding and lenders hoping to issue new credit. For businesses looking for tailored financing options, a commercial finance broker will arrange everything from loans to commercial mortgages and will take a commission — often from both parties — to complete the transaction.

Financing options

Over the past few years, the range of options to source capital for high-value expenditure has improved. Where before, you were limited to taking out a business loan (secured or unsecured) now you can avail of a wide range of different alternative financing options from invoice finance to commercial mortgages. In this short article, we will cover the above-mentioned areas of business finance offered by credit brokers.

What is invoice finance?

One of the primary loan types on offer through commercial finance brokers (NACFB) is invoice financing. And any commercial broker that is registered with the National Association of Commercial Finance Brokers (NACFB) will almost certainly be able to steer you in the direction of a lender who offers this service. The service involves invoice discounting and invoice factoring, and a broker, not a lender, will explain the main differences between invoice discounting and factoring so you can choose the type of borrowing that best fits your needs. 

There is also the option of using a lending platform. This is a good option to connect with the best lenders for your particular situation, rather than choosing a lender that offers terms and conditions and minimum standards that are sub-optimal for your specific borrowing needs. If you have many customers that often have slow payment cycles, you can get cash upfront, by offering an invoice finance company a small percentage of the final invoice amount. They will, of course, need to verify that the invoice amount and customers are legitimate. Many business owners choose invoice discounting during off-peak trading times to free up some cash for ad-hoc expenses and to supplement cash flow shortages.

Do they have real customer case studies?

There’s little stopping an individual or website setting up as a commercial finance broker, so unfortunately the segment attracts many fly-by-night operations. Do they give named customer case studies you could easily pick up the phone to? Are they on an authoritative independent customer reviews site?

Sadly, we often see brokers with fake website case studies that use stock photography, or others claiming to have helped real businesses that they’ve really had no involvement with. Your business could provide real customer references, so why can’t they?

You can find all of our real case studies here, and see what our customers think of us on independent review site Trustpilot

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Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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Are they regulated by the Financial Conduct Authority (FCA)?

Many firms don’t realise that the business finance market is largely unregulated, meaning that it doesn’t necessarily offer the protections that we’re used to in our personal finance matters, such as a Financial Ombudsman, or an overarching obligation to Treat Customers Fairly.

Though many unregulated commercial finance brokers will provide excellent service, a regulated broker is surely a safer bet.

Funding Options is fully authorised and regulated by the FCA, and we support their Treating Customers Fairly initiative.

Looking for finance?

Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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Do they actually specialise in business finance?

Many self-proclaimed commercial finance brokers will actually be specialists in another area of finance, such as residential mortgages or life insurance, but may still claim to be able to help you with business finance. For them, business finance is a side-of-the-desk activity at best, meaning nothing like the breadth and depth of knowledge required for the complex and ever-changing alternative finance market.

We call our staff Business Finance Specialists for a reason — they know the market better than anyone. Funding Options exists to help your firm find the best finance for your situation, quickly and easily, and that’s all we do!

Looking for finance?

Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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Do they only cover one finance product?

These days there are literally dozens of different ways to finance your business, but many brokers only specialise in one particular product area, such as commercial mortgages or hire purchase. These brokers may serve their typical target customers extremely well, but if you’re outside of their norm, it can feel a bit like they’re forcing a square peg into a round hole.

We help UK businesses find the right finance from across the market, whether you need a business loan, invoice finance, asset leasing, a commercial mortgage — whatever fits your situation best. And if you simply don’t know what kind of finance you need, we can help with that too.

Looking for finance?

Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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Are they too closely tied to a lender?

Many commercial finance brokers are closely tied to a particular lender, and are sometimes actually owned by one. Indeed, some commercial finance brokers are even lenders themselves. If a commercial finance broker fancies lending to you, it’s against their interests to refer you to a more suitable alternative finance provider. Funding Options isn’t a lender, and our relationships with lenders are based on what they can offer our customers — not what they pay us. We don’t charge our customers a fee, and we have standard commission terms with our lenders, so there’s no incentive to favour one over another. We’re actively doing business with more than 70 lenders across the whole market, and we’ll never match you with a lender that doesn’t suit your requirements.

Looking for finance?

Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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Do they have Professional Indemnity insurance?

If something goes wrong that’s not your fault, and your business suffers as a result, there’s no point pursuing a claim against a commercial finance broker if they have no assets or insurance. You’ll just be throwing good money after bad. Professional Indemnity insurance gives more potential recourse if you’re mistreated, and is also a sign that an insurer has taken a look at the commercial finance broker’s credentials before choosing to back them.

Funding Options is fully insured.

Looking for finance?

Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

See your Funding Options

Commercial mortgages

Sometimes called business mortgages, a commercial mortgage is often used by business owners looking to acquire a new property or land for their business. Often it is used by businesses that have outgrown their premises and need a new building. Businesses that are rich in cash, can purchase a building to avoid paying commercial rent, and can even sublease some of the building to other businesses.

The primary difference between a residential mortgage and a commercial mortgage is the value of the property is an order of magnitude higher. It’s basically any loan that is secured against a property, which is not your primary residence. A buy-to-let mortgage is a nice way for businesses to add a new revenue stream, but will necessitate a commercial mortgage. It might be worth reading our article about property development finance

A commercial broker will be able to advise on different lending options from invoice finance to commercial mortgages but will often have particular lenders that are favoured over others due to different commissions. There is also the option to use a lending platform to match with hundreds of 3rd party registered lenders and get a loan within 24 hours.

Always make sure that when looking for a source of funding you only engage the services of a lender that is authorised and regulated by the financial conduct authority. This protects all parties involved and is a welcome safety blanket in the commercial finance market. When searching for businesses on the FCA website even if you don’t know the company number, you can still search by company name or reference number. You can then narrow your search results by adding a location.

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