You do not want to get trapped in wrong and expensive finance when you need money quickly. Lenders conduct a few checks before approving it. Filing for a loan unsuitable for your needs may lead to immediate rejection. It may impact your credit score.
Moreover, you may lose the opportunity with another application. If you qualify for the loan, it may not be the best option personalised to your circumstances. You may face higher monthly repayments, interest rates and missed payment costs. It could impact the purpose you took the loan for.
Here, A commercial loan broker helps you save time and money by providing the exact lender that meets your needs. It helps you avoid the constant stress of exploring the best business loans that meet your finances. By signing with the loan broker, you can skip the hassle that lies in between and sign off the right agreement.
Who is a responsible commercial loan broker?
A commercial loan broker is a company or a broker that acts as an intermediary between the lender and the business. He helps source the finance by finding the right lender by knowing the business type, loan purpose and amount requirement. He shares a good community of lenders and thus helps a business figure out the right lender quickly. He also helps businesses with low credit histories and suggests lenders that deal with businesses with similar circumstances or revenue.
A responsible broker follows standard terms and conditions. It keeps the customer’s best interest at the centre of finance and defines laws accordingly. It safeguards the businesses from paying extra over the loan.
5 Ways a responsible broker help business avoid unsecured loan risks
An unsecured loan has competitive interest rates and terms. Businesses may need it to update inventory, crack important business deals, payrolls, or marketing. Ensuring the best loan with comfortable management requires a good and responsible borrower. He helps businesses avoid risks associated with unsecured business loans. Here is how:
1) Prevent businesses from loan sharks
As a responsible broker, the person connects the business with only the best and most regulated lenders. Unsecured loans are competitive in nature. Loan sharks operating as shell companies, charge high rates. It may impact the business finances. It may face problematic consequences for defaulting on the loan. It may even cost your life or property.
By connecting with the right lenders, it secures the business’s interest without compromising on finances. The business shares the confidence of the broker. Thus, you can trust the lender for their needs without worries.
2) Help you get the best interest rate
Unsecured business loans, as mentioned above, attract competitive interest rates. It is especially true with short-term unsecured business loans aspect. It happens because the lender does not share any security or an asset as collateral on these loans.
Thus, picking the wrong lender means more payments. Here the lender helps you provide the best interest rate lender for your personalised finances, cash requirement and loan term.
By providing basic information about the interest rates, you are comfortable with, the payments you can make and financial flexibility; you get the right loan. He shops around for the best interest rates in the lender’s community. It helps you skip the hassle and gain the best rates.
3) Limits loan rejection chances by 80%
An unsecured business loan rejection impacts the credit score drastically. You can avoid it by contacting the best business loan broker.
Brokers search for the best lenders by considering the business requirement and finance. It further discusses the situation with the respective lender. Lender offers the terms at which the business can get the loan.
The broker communicates terms with the business and helps them with the application process. He helps to get the needed documents in place. Business seeks the broker’s help in ensuring the perfect loan application. He also helps choose a realistic amount that the business may get as per existing finances.
If the information aligns with the proof provided, the lender sanctions the loan immediately. In this way, it prevents loan rejection and ultimate credit loss.
4) Helps secure affordable loan with the right credit score
A credit score is the most crucial factor for loan approval and costs. A good credit score helps you get a business loan with affordable interest rates and terms and vice versa. Startups seeking funds for the first time may benefit from this. Certain parameters like- payment history, credit Utilisation, and debts, cover the credit score.
An experienced loan broker shares detailed knowledge and information regarding credit scores. He may help you improve your credit score before applying for a loan. He does so by analysing the existing credit situation and suggesting improvement potential.
He knows credit score is the best way to secure low-interest rates and terms. You may benefit from a loan broker by fetching cost-friendly borrowing terms after credit score improvement.
5) Helps get the right lender for special requirements
A commercial broker listens to the requirements of a business in detail. You read above that he helps find a lender personalised to your requirements. That’s true. Well, some businesses have out-of-the-box requirements.
For example, if a business lacks sufficient revenue but shares good expertise and projects under the belt. They need an amount to finance operational costs. However, the condition mandates them to have a guarantor. But they lack a guarantor and do want to go for a guarantee-based loan.
In this situation, the broker help find the best lenders for no guarantor business loans facility. In these loans, you do not require a guarantee. He ensures to keep the interest low as business lack revenue and highlights other appreciative achievements of businesses like- operating consistently no layoffs in tough times, or their efforts in exploring other complementary businesses to upscale revenue.
All these may help the business get a loan without a guarantor hassle-free. Although, the business must provide the upcoming or existing project proof of timely repayments.
These are some ways a responsible commercial broker helps businesses leave troubles on the table. He helps them with personalised finance solutions by connecting them with the right lenders. It helps businesses skip the hassle of exploring loan quotes, applications and documentation. It amps up the loan approval possibilities.
Harry Kane is a financial writer and author who has covered wide topics related to business loans and finance for the last decade. He has been working as the Chief Contributor in finding out deals on various business finance products covered by Thebusinessfunds, a reputed business loan broker firm in the UK. The primary work of Harry is to analyse the loan requirements of various businesses according to their circumstances and affordability. He directly communicates with the loan aspirants and guides them to get the right loan matching their needs. He has a vast experience in finance writing, working with many major business firms in the UK. At Thebusinessfunds, Harry also used to write well-researched blogs covering the financial problems of business loan aspirants and providing relevant solutions. He is a postgraduate with MSc. in Banking and Finance.