Broker networking: The partnerships that pay

Broker networking: The partnerships that pay




Alternative finance needs commercial finance brokers but brokers increasingly need us too.

Alternative finance needs commercial finance brokers. Brokers have good relationships with small business owners and a level of influence that makes them ideal to explain innovative funding opportunities to SMEs. But brokers increasingly need us, too. In just a few short years, this new reality has crept up on some intermediaries, and during that time, alternative finance has gone from being a novel substitute to the more traditional forms of business funding to becoming a serious contender in the financial services world.

The speed of growth in alternative funding has been a surprise, even to those within the industry itself. Looking back, a perfect storm occurred in 2008 when the economic downturn hit. Overnight, SMEs became the banks’ least favourite customers, while, in the background, digital innovation was creating new opportunities, platforms and ways of communicating. Although lines of credit disappeared and new funding opportunities dried up for small companies, technological developments enabled online alternative finance providers to emerge quickly in response to SMEs’ need for a new type of business funding. Recognising small businesses’ hunger for capital, alternative funders used this digital boom to meet those needs.

Make no mistake, after the US, Britain is the place to be for alternative finance. In terms of our industry, the UK leads Europe by a phenomenal margin – we represent 79% of the European alternative finance sector. And, according to recent research by the University of Cambridge and EY, the British tranche was worth £1.78bn in 2014, representing a year-on-year growth rate of 168%.

Ryan Deacon, Sales Director of Crest Finance, comments: “The growing attraction of alternative finance for brokers is obvious. We must serve our small business clients as efficiently as possible, securing the right type of funding for their specific situation, and with minimum delay. What’s notable about the new breed of finance providers is their flexibility, the speed with which they handle processes and how quickly they can free up funds. There’s none of the multiple platforms and slow applications of more traditional financial institutions. It’s no wonder alternative funders are increasing in influence in the UK - and the broking community should be keen to keep up.”

So, alternative finance is moving towards the mainstream and taking its place on the main stage. It’s even affecting how conventional financial institutions are thinking about funding companies. This makes the need for brokers to work closely with us all the more important – both to help their small business clients and to grow their own companies. Events like the forthcoming Leasing World Expo, taking place in central London at the beginning of October, are great opportunities for broking professionals to meet their peers, make contacts with funding providers and to learn about new trends from some of the biggest names in the business. Speakers at this year’s event are covering topics from the state of the economy for SMEs through to what funders think the year ahead will hold. Again, I would argue that, with the funding landscape changing at such an accelerating rate, it’s vital for brokers to keep themselves up-to-date with the latest developments and the most recent thinking on all sides of the funding equation. Of course, the same is true for us, those providing capital. We must learn from each other.

Matt Haycox of Access Finance agrees. He says: “Relationships are everything in our business, both those with small firms and with funding providers. It’s important not to sit on your laurels, and simply depend on existing networks – they should be constantly developed and nurtured. The world of business finance has changed a lot in the last few years, with more funding options and types of product available. That’s a good thing for a brokerage like ours that specialises in otherwise hard-to-fund businesses. The more choice and flexibility on offer, the better for clients. But we brokers must seek out these new lenders, talk to them about what they offer, and interrogate them about how that differs from their peers. Established contacts are great, but building new links will enable us all to add value for our SME customers now, and into the future.”

It is a thrilling time to be working in this field with so much innovation occurring in the UK, genuine disruption taking place to small business finance and more enterprises gaining access to a more flexible and tailored type of borrowing. One size no longer has to fit all. But there’s still a desperate need for us - funders, and brokers alike - to ensure that business owners fully understand the range of finance now available to them. After all, only about 35% of SMEs are aware of alternative finance options, such as crowdfunding, research by the British Business Bank shows. There’s clearly still a long way to go before all small company bosses can find the growth capital they need.

Brokers and funders must build and cultivate our relationships with each other to be able to present a united front to business owners, get our message out that money is available and give SME bosses the information and support to succeed. The broker’s role is subtly shifting as the funding landscape changes. Our function as funders is also evolving. To keep pace with these movements, to remain ahead of the pack and to keep giving SMEs what they want, we must work together. I believe the partnership between the funder and the broker is a vital one, and if developed thoughtfully, intelligently and with due respect on both sides, it really can pay for all concerned.

Boost Capital is a leading provider of business funding solutions to growing SMEs throughout the UK, offering fast and flexible financing to business owners in a variety of sectors. Boost Capital is committed to serving the SME community and strives to support them in every aspect of their growth endeavours. Be sure to connect with Boost Capital on LinkedIn, Google+ and Twitter!

By Alex Littner, Managing Director of Boost Capital

Leave a comment