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The NACFB is the only UK trade body dedicated to the commercial finance broker. We represent members from across the whole commercial finance market: from buy-to-let specialists and commercial mortgage advisers to vehicle finance brokers; from leasing and asset finance specialists to factoring brokers. All NACFB members comply with an industry recognised Code of Practice
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Article - Chinks of light for top brokers
1st November 2007
Loan Distributor
November edition
The press is full of bad news at the moment. The credit crunch has been splashed across every trade and consumer journal in a “the end of the world is nigh” type way; but, being of a naturally optimistic disposition, I prefer to look on the bright side and hopefully offer some comforting crumbs in this autumn of discontent. At a recent NACFB Regional Workshop, held aboard HMS Belfast, the subject of the credit crunch reared its head (this was the same weeks that a certain Newcastle-based bank had just hit the headlines for all the wrong reasons) and David Whittaker from Mortgages for Business argued that, far from being a problem, the contracted market was actually a huge opportunity for brokers to prove their worth to their clients.
Let me explain. During a time of cheap and easy credit, such as the UK economy has enjoyed over the past few years, by definition, money at a good price is easily found. If there’s lots of money about, there’s fierce competition between lenders to secure their slice of the cake so it’s easier to track down a funder and a good rate – so, the argument goes, why would a client need to pay for a broker to do the work for them? Although the NACFB in no way supports this argument, it’s easy to see why some people may reach this conclusion. And, as a result, a broker has a much harder job of proving his worth to his clients.
Another indirect result has been that brokers with little or no experience of the commercial market have found it relatively easy to place deals. The results of the recent Charterhouse survey into the commercial broker market has revealed that one of the biggest concerns of commercial brokers is the fear that regulation will be brought to a currently unregulated market due to advice given to clients by brokers inexperienced in the commercial finance industry. How widespread the actual problem is, is unclear, but certainly brokers perceive it to be a big problem.
But now things are changing – and this is a real opportunity for experienced commercial brokers to prove their worth. The market has contracted and lenders are becoming more picky about the deals they will do and increasing the rates they charge. It takes real skill and experience to put a deal together to make it attractive to a lender to secure the best terms for a client. Money is not so easy to come by – and the result is that brokers with experience and knowledge will be able to prove their worth to their clients by finding them a deal that’s both more suitable – and also probably cheaper – than they would be able to find using only their own resources.
The irony is, of course, that brokers are always able to do this; whether the market is liquid, as it has been for the last few years, or in its current squeezed state. The only difference now is that they have the advantage of perception: that it’s easier to define the benefits a broker can bring to your business. But in the current gloomy climate, you must take your chinks of light where you can. And as a certain chain of supermarkets are wont to say: “Every little helps”.
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