What can a finance broker do for you?
Whether you are looking to buy a practice or refinance existing borrowing, you might be wondering whether to approach lenders yourself or if it is worth using a finance broker. The benefits of having a dental specialist broker are plentiful.
Increased chance of loan approval – you want to put your best foot forward upon first approach to the bank. Being able to do so rests on understanding what the bank are looking for, what questions they need answering and ensuring that the deal is structured correctly. The role of the broker is to challenge the deal just as the banks’ credit teams would, to answer concerns before they are raised and give you the upper hand. The key is honesty – even if there are downsides of the deal, these should be presented at outset so that your broker can work collaboratively with the lender to find potential solutions.
The detail of a loan offer will depend on how detailed the initial loan application is. A loan offer based on minimal information has less chance of getting through the credit process. Submitting all the information at outset allows you to get the best offer from the lender. Having a broker who understands practice valuations and the practice sales process alongside lender requirements is priceless.
Speed – using a broker gives you the gift of time. A broker will approach all prospective lenders on your behalf and give you a single summarised report with all of their feedback. This will usually take around 48 – 72 hours. Unaided, it could take you this time alone to prepare your application for each lender.
When it comes to new healthcare loans, gone are the days where loyalty always pays off by going to your existing bank. Whilst the occasional lender can provide slightly better terms if you already bank with them, your best option is to search the whole market just as you would for a residential mortgage.
From our experience it should also be noted that general managers and relationship managers are not able to give as competitive rates as the dedicated healthcare business development managers (that intermediaries use) from the same banks.
Get the best rates – Brokers deal with rates all day, every day. They know where they can negotiate, and which lenders will best suit your requirements. Based on the number of cases they see, brokers also have the benefit of being able to provide market feedback to the lenders – helping them structure their offers more competitively to win your business.
The lenders are also driven to provide brokers with their best terms to motivate brokers to continue to bring business to them. When dealing with a broker, the banks know they are competing against one another and need to put their best offer forward.
But what will it cost me?
Using a broker might not cost you anything. Most banks will pay NACFB registered brokers a procuration fee which does not affect what you are charged. Providing you are not required to pay a standalone fee direct to the broker in addition, using a broker should cost you no more than if you went to the lender directly. PFM Dental are one of the few brokers who do not charge a standalone broker fee for commercial finance.
