CFI_12-13_NACFB.qxd 27/2/09 11:29 Page 3
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ness best doesn't think it's worth the risk, then
no one else will either. Then the old enemy rears
its ugly head: inertia. You wanted to expand, you
Small businesses are failing, not
wanted that new piece of equipment, or to take
on more staff, but you have been told 'no', and because they aren't good businesses,
that's the end of it. So as an SME you decide to
stay where you are; you don't bid for that new
contract, you don't employ more people or
but because their credit lines have
increase your turnover; and ultimately you don't
put more back into the economy through tax been strangled
and spending.
Commercial case Not only that, but there are many different possi- in the current market? If not, does the business
So, what could the end result have looked like bilities for commercial funding and to put a deal have any other assets it can use? What about
if that SME had gone to a commercial finance together you may have to "visit" the different equipment finance or vehicle finance? Will trade
broker instead? I don't mean just any broker, but aspects of that business. A commercial mortgage or debtor finance make a difference to the overall
one with experience and knowledge of the mar- is not the complete answer to business funding picture? In this market, if you want to make a
ket, working to a proper code of practice, and (as perhaps some were led to believe only a year commercial lending case work, it is no longer
who can look at a business in its entirety to pres- or so ago). As finance goes, a commercial mort- about ticking boxes; it is about the story of that
ent a lending proposal in the correct way. With gage is an expensive way to fund anything other business.
the best will in the world, a banker is restricted than property; it's both a long term commitment As they say every good story has a beginning,
by the lending policy of his or her bank. But not and relatively inflexible. It seems almost incon- middle, and an end. As a commercial finance
all lenders are the same, or have the same restric- ceivable now that barely 12 months ago, cash was broker, you should understand all these elements
tions. There are differences even amongst the big available to almost everyone at what now seem to as your average SME almost certainly will not.
players on the high street: different lenders have be incredible loan-to-values and low rates. And although a lot of the experience may have
different appetites for different deals. And a bro- Now every business needs to be looked at in been drained from the lenders' front lines, the
ker's livelihood is based on knowing where these its entirety. How much does the business need to good news is that it's probably still in the market
distinctions lie. buy its property? Do the loan-to-values stack up as a member of the NACFB.
www.mortgageintroducer.com March 2009 Commercial Finance Introducer
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