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Founder and director of Interim Finance, Andrew Littleford, shares tips for brokers from his more than 20 years in the short-term lending sector
Short-term lending by nature is highly flexible, quick and tailored to reflect the needs of individual clients. This fluid, real-time style of finance provides a useful alternative when the more prosaic style of funding is not available – and is a particularly attractive option for SMEs when seeking to bypass cash flow issues or actualise business opportunities. Here are some tips and tricks to get ahead of the game:
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There is no room for creativity: Thinking outside the box has got to be one of the most prolific tropes in the marketplace today that has worked countless times from Henry Ford to Steve Jobs … but the short-term loan process is a well-oiled and streamlined one. By simply following the steps and staying on the beaten path you can match and quite exceed your clients’ expectations.
Send information in one hit: Sending information as you receive it is guaranteed to delay the loan process. There’s no upside to receiving piecemeal rates, letter of purpose and so forth; it’s cumbersome and confusing with the volume of deals in process at any particular time. Provide it in one hit to expedite the process.
If we can’t read it, we can’t process it: Make sure that application forms are legible and fully completed.
Understand the letter of offer and corresponding conditions for settlement: We often find that brokers haven’t properly read the letter of offer, including the conditions for settlement. This becomes a roadblock, source of frustration and lengthens the loan process.
It’s apples and oranges comparing a short-term loan with a traditional loan: Clients need to realise that a short-term loan is just that – a stop-gap measure for a limited period. A short-term loan should be viewed on its own merit and not be compared with a traditional first mortgage bank rate that reflects a standard product with a typical 20-year-plus loan period. There is a modest premium for this speed and autonomy, but there’s no reason for it to be outrageous (1-1.5 per cent per month is a good gauge). Also keep in mind that there’s often an upside to ‘sticking around’ and offering the full service. With loans typically written for 2-12 month periods, there’s an opportunity to guide your client through a refinance of the short-term facility. This in turn provides for “two bites of the cherry” – commission on the way in and the way out.
Providing basic due diligence isn’t hard: Short-term lending is in the same gene pool as mortgage lending, so the process is essentially the same. Having said this, like any niche market, it requires an understanding of both product and processes in order to maximise opportunities. We’re geared to provide a complete backend support service, where brokers can elect to have the loan written and managed on their behalf at no cost.
