As a broker, it’s your job to find the right financial solutions for your clients. To do that, you have to start by asking the right questions.
And we don’t mean jumping right in with ‘do they need a short, medium or long term small business loan?’ If you want to be the partner your clients can rely on, the Strive Financial team suggest you ask these key questions when they first come to you for a commercial loan.
When does your client need the funds?
Chances are, by the time they’ve contacted you, they’re probably in a bit of a tight spot and need the cash. Fast. They don’t have the time to wait for the weeks long process the traditional banks still use to fund a small business loan. Lucky they’ve got you. Someone who can direct them to us and, once the paperwork is all sorted, they can access their loan – usually within 24 hours.
How long do they need the loan?
It’s important to think about the loan term. Do they need a short, medium or long term small business loan? Short term, or bridging loans, are generally for smaller amounts and repaid within a few months. If your client needs to borrow a larger amount, they’re possibly going to need a much longer repayment period, perhaps even a few years.
What are they using the loan funds for?
As a broker, you need to understand the purpose of the loan. Afterall, you’re the financial expert and may be able to offer your client solutions they’ve not otherwise considered. Are they borrowing to secure an investment? To buy new equipment or inventory? To pay their tax debt? How the client uses the funds will determine how much they can borrow and how quickly they can repay.
What can they offer as security for the loan?
To access fast finance, your client needs to offer security. The most common form of security offered and accepted by us is real estate. The security may also inform the final loan amount as the lender needs to determine the Loan to Value Ratio (LVR) to ensure the loan is covered in the unlikely event the borrower can’t repay.
How are they going to repay the loan?
Will your client be able to make monthly repayments? Are they sorting out their tax debt and the loan will be repaid within weeks? Are they relying on this loan to reignite their stalled cashflow, so it all hinges on that cash moving freely once again? Once you know the answers to these questions, you can decide which finance solution is best for them.
How much funding do they need?
The amount of funding needed will determine the best type of finance – short term, or bridging, finance. A medium term loan or a long term small business loan. Strive Financial offers all three, with loan amounts ranging from $20,000 right up to a cool $2M.
By asking these key questions at the very beginning, you can save yourself – and your clients – a lot of hassle down the track. Not only can you offer them the right solution to their current financial needs, but you can also set realistic expectations about how much they can borrow and for how long. If you need any more help, the Strive Financial team are just an email or phone call away.
Cash is king. Nowhere more so than in small business – it enables the purchasing of stock, paying of staff and contractors or even paying debts. It also enables small businesses to invest in new opportunities or innovate – but cash for these businesses can be a little bit chicken and egg. Which comes first?
UPDATED 7 JUNE 2021: with the EOFY fast approaching, now is the time for small businesses to make the most of the Instant Asset Write Off. Small businesses could realise immediate benefits in acting before June 30, but as always there’s plenty to consider so read on for more information.