Need Finance? Don’t Put it Off
Why September Can Be an Expensive Time to Arrange Business Finance
When is your business most selective about the work it takes on?
Usually when you’re busy.
When the diary is quiet, you’ve got more capacity. When you’re rammed, you can afford to be choosier.
Lenders and underwriters aren’t entirely different.
Every September I see the same thing happen. Directors come back from the summer, look ahead to the final part of the year and suddenly realise they may need finance.
Stock. Recruitment. Equipment. Cash flow. An opportunity they don’t want to miss.
And they all start looking at roughly the same time.
Same business. Different timing.
I remember one case last September particularly well.
A director came to me looking for finance and, while going through the application, I noticed that his bank balance had been quietly weakening over the previous month.
We still got him a good deal at around 16%.
But had we started the process several weeks earlier, while the bank statements were stronger and before the September rush really got going, I believe we could have had a very different conversation with lenders. Potentially somewhere around 10–11%, depending of course on the lender and the final application.
Nothing fundamental about the company had suddenly changed.
The timing had.
It’s a little like seeing the same laptop for £1,000 on Black Friday and £1,400 a few days later. Same laptop. Different market.
Don’t wait until you need the money
From the middle of September onwards, lenders can get busier as businesses that postponed decisions over the summer all come back at once.
At precisely the same time, some directors have another month’s trading showing on their bank statements.
If those numbers have weakened, even slightly, you’ve potentially got two things working against you: a busier market and a less attractive application.
That’s why I tell directors the same thing again and again:
Money is much easier to find when you don’t desperately need it.
You don’t have to take the finance.
You don’t even have to apply immediately.
But if there’s a reasonable chance you’ll need funding during September, October or the run-up to Christmas, start investigating it while everything still looks calm.
A good broker should improve more than the rate
There are three things I believe a good broker should bring to the table.
First, how the application is presented. Underwriters want the information they need, clearly and properly explained. A good case presented badly can create unnecessary questions.
Second, knowing the lenders. Rather than simply joining the queue through an online application form, you’re dealing through somebody who already understands how particular lenders work and what they want to see.
Third, knowing where your case belongs today. The lender who was perfect for a business last year may not be the right answer now. Appetite, pricing and criteria change.
That’s the broker’s job. Not simply finding a lender, but knowing which conversation is worth having in the first place.
Get in before the rush
So if you’re looking ahead to the next few months and there’s even a possibility you’ll need finance, my advice is simple:
Get in before the rush, not during it.
The strongest time to look at your options is usually while your numbers still look good, you’re under no pressure to say yes, and you’ve got time to compare what’s available.
If you’d like me to take a look at what might be possible, get in touch.
Do you need someone on your side? I’m Mark Smillie.
