As a broker, you play a critical role in the success of your clients. The biggest challenge faced by SMEs today is securing the necessary funding to grow and prosper. However, with traditional finance options becoming less popular, it’s important for brokers to be well-versed in alternative finance solutions.

In this article, we provide you with five tips and insights to help you assist your clients in securing the funding they need to succeed.

Tip #1: Understand the Specific Funding Needs of Your Clients

To secure funding for your clients, it’s essential to understand the exact amount of capital required and for what purpose. This could be for a particular project or purchase, such as expanding into a new market or cushioning financial risks while waiting for invoices to be paid. It’s important to prioritize the funding needs and differentiate between what is essential versus what is a “nice to have.”

Tip #2: Consider All Costs

In addition to “fixed costs,” it’s crucial to factor in a margin of error for unexpected expenses. When planning long-term projects, include a contingency plan in case of unforeseen circumstances. Before suggesting the default solution of a business loan, explore other options that may be more advantageous for your client, such as using working capital to grow their business without taking on debt or sacrificing equity.

Tip #3: Don’t Just Go for the Default Solution

Instead of recommending a business loan right off the bat, consider whether there are better ways for your clients to access the funds they need. For instance, would your client be better off taking a more organic approach and making use of their working capital? By taking advantage of their existing assets, your client can increase their income without needing to take on debt or give up equity, especially when there’s a lot of uncertainty in the market.

Tip #4: Determine Affordability

Before entering into any lending agreement, it’s crucial to evaluate affordability. Brokers must assess what would happen if the business’s sales declined or they faced other unexpected expenses. Understanding cash flow and the timing of big bills is critical in determining affordability.

Tip #5: Research and Compare

Take the time to research and compare different funding options to find the best fit for the business. This may include looking at the terms and conditions, interest rates, and any fees associated with the funding.

Takeaway

Brokers play a crucial role in helping SMEs secure the necessary funding to grow and prosper. By exploring alternative financing options, understanding the specific needs of your clients, and evaluating all costs associated with each option, brokers can provide valuable support and guidance to their clients.

Don’t limit yourself to traditional finance options — consider alternative finance solutions to help your clients achieve their goals. If you’re looking for funding options tailored to the needs of SMEs, consider working with Fifo Capital. We work closely with brokers to help their clients succeed. For more information on working with us, visit our partners section.