Should I use a business finance broker?

A broker helps when you are unsure which type of funding fits, when your bank has said no, or when you want several lenders’ offers set side by side in pounds. Before you share your figures, ask how the broker is paid and which lenders it can reach.

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What a broker does

A business finance broker takes your company’s details once and finds the lenders whose criteria the business meets. It presents the application, deals with the lender’s questions and sets the offers that come back side by side. A broker does not lend and does not make the decision. The lender decides, and sets the rate, the fees and the security.

Your own bank knows your account and can lend on that history. It offers only its own products. A broker can reach lenders your bank does not compete with: asset finance companies, invoice finance providers, specialist property lenders, and lenders that will look at younger companies or particular sectors.

If a large bank declines the company, the Small and Medium Sized Business (Finance Platforms) Regulations 2015 require it to pass your details, with your agreement, to designated finance platforms that show the request to other lenders. That duty does not apply when a broker made the application to the bank.

Broker or straight to a lender

Through a brokerStraight to a lender
Who you deal withOne broker, who deals with each lenderEach lender separately
Lenders consideredThose on the broker’s panel that fit the requestOne per application
How it is paid forCommission from the lender, a fee from you, or bothThe lender’s own fees and interest
Credit searchesDepends on how the broker submits: ask before anything goes outOne per application
Comparing offersSet side by side by the brokerYou compare them yourself
Regulated credit (a sole trader or small partnership borrowing £25,000 or less)The broker needs FCA permission for credit brokingThe lender needs FCA permission to lend
Where it suitsUnsure what fits, declined before, or wanting several offersA long banking relationship and a straightforward loan
A woman going through invoices beside her laptop

How brokers are paid

There are two ways. The lender pays the broker a commission when the funding completes, as a fixed sum or a percentage of the amount borrowed. Or you pay the broker a fee, agreed before the work starts, sometimes on top of commission. Different lenders pay different commission, so ask whether the broker earns more from one lender than another on your case.

Swoop Finance Limited, which runs the funding search here, is a credit broker on the FCA register under firm reference number 936513. It receives commission from the finance provider when funding is arranged, either a fixed fee or a percentage of the amount you receive, and different providers pay different rates.

Commission comes out of what the lender earns on the loan, and you pay for that through the rate and the fees. Compare every offer on its total cost in pounds over the term, whoever brought it to you.

Questions to ask a broker

How are you paid on my case?
Commission from the lender, a fee from you, or both. Get the answer in writing and in pounds.
Which lenders will you approach?
The size of a panel matters less than whether it includes lenders for the type of funding you need.
What credit search will be made?
A soft search is visible only to you. A full search is recorded on the file and seen by later lenders.
Are you on the FCA register?
Check the firm at register.fca.org.uk. Lending to a limited company is not regulated credit, but an authorised firm still has the FCA’s principles to meet.
Will you show me the total cost?
Every offer’s interest, fees and charges added up in pounds over the term, so you compare like with like.

When to go to your bank first

If the company has banked in one place for years, has filed accounts that show steady profit, and wants a term loan or an overdraft of a size the bank lends every day, start with the bank. It already holds your statements, and the relationship manager can tell you early whether the request fits.

Use a broker or a funding search when the request is unusual for your bank: invoice finance, asset finance, a commercial mortgage, money to buy a business, or a loan for a company your bank considers too young. Use one too when the bank has said no and you need to know which lenders’ criteria the business meets.

Use one broker at a time. Two brokers sending the same application to the same lenders put two searches on the file and present the lender with the same deal twice. Tell the broker which lenders you have already applied to, so it does not send the application back to them.

Business loan comparison calculator

Two loan offers side by side: the monthly payment, the total repaid with fees, and the difference in pounds.

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Questions people ask

Do business finance brokers charge a fee?

Some do. A broker is paid by commission from the lender, by a fee from you, or by both. Ask before the work starts, get the fee in writing in pounds, and find out whether it is payable if no funding completes. A fee charged up front, before any offer exists, deserves a close look at what you get for it.

Is a broker cheaper than going to my bank?

It depends on the offers. The lender pays a broker’s commission from what it earns on the loan, and you pay for that through the rate and fees. A broker can also find a lender whose offer is lower than your bank’s. Put every offer, from the bank and from the broker, on total cost in pounds over the term and compare those figures.

Can I use more than one broker?

You can, but two brokers approaching the same lenders put duplicate searches on the company’s file and show the lender the same application twice. Choose one broker, give it the full picture, and tell it which lenders you have already applied to.

Do business finance brokers need to be regulated?

A broker arranging credit of £25,000 or less for a sole trader or a small partnership needs FCA permission for credit broking, because that is regulated credit. Arranging a loan for a limited company is outside that regime, so a broker for companies may not be authorised. Check any firm on the FCA register before you send it your figures.

Can I go straight to my bank?

Yes. If the company has a long trading record with its bank and wants a straightforward term loan or overdraft, start there. If the bank declines, a large bank must offer to pass your details to designated finance platforms, and a broker or a funding search can show which other lenders’ criteria the business meets.

Why was my business loan declined?

A lender declines an application that falls outside its lending criteria: the bank statements, the trading history, the sector, the debt service cover, a credit file or the security on offer. Ask the lender which criterion the application missed, fix what can be fixed, and apply next to a lender whose criteria the business meets. The full answer.

What do lenders look at for a business loan?

A lender reads the company's bank statements and works out whether its cash covers every loan repayment with room to spare. It then checks the trading history, the Companies House record, the credit files of the company and its directors, and what the money is for. The full answer.

Business loans

A business loan is a sum your business borrows and repays with interest over a fixed term, in regular instalments. The lender prices it on the risk it reads in your accounts, your bank statements and any security you offer. Compare offers on the total you will pay in pounds, counting every fee. The full answer.

What documents do I need for a business loan?

For a limited company, a lender asks for recent business bank statements, the last filed accounts, up-to-date management accounts, details of existing finance, and identity and address evidence for each director. For a larger loan or a new business, add a plan and a cash flow forecast. The full answer.

Finance is subject to status and to the lender’s terms. A personal guarantee makes you liable for the company’s debt if it does not repay, and it can be enforced against your own assets, including your home. Nothing here is a personal recommendation.

Start a funding search

Start a funding search

Funding searches run on Swoop’s platform. Swoop Finance Limited is a credit broker and not a lender, and is authorised and regulated by the Financial Conduct Authority (FRN 936513). Buzz Accounting Ltd introduces businesses to Swoop and may receive a fee from Swoop when funding is arranged. Business funding is separate from the financial advice Equity & General Financial Services Limited gives through this website. Finance is subject to status, and a lender may ask a director for a personal guarantee.

Cover for a personal guarantee

If a lender asks you to guarantee the company’s borrowing, our advisers can advise on life cover for that debt.

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