Raise your hand if you like to save money.
We do, too. It’s precisely why we’re in this business! We love to help businesses grow, and growing a business costs money.
So if we can help you grow your business with the least amount of cost to you, we feel we’ve succeeded. We are passionate about this.
Shopping for Deals
If you want to buy something for yourself personally, you usually do a bit of comparison shopping. The internet has made this easier than ever. It’s more cost-effective, too, because you don’t have to spend extra gas money driving around to a bunch of different stores. Once you’ve found the best price, you purchase with confidence knowing you’ve gotten what you wanted without spending a penny more than you needed to.
It feels good.
When you need to buy something for your business, it’s the same. You want to spend as little as possible while still getting what your business needs. This is true for office supplies and computer systems, machinery and equipment of all kinds. It even applies to the services that your business requires – financing included.
Shopping around for the best financing deal is the one time that shopping around is a bad idea.
Surprised? Hear us out…
What Happens When You Shop Around for Financing
When you contact a financing company and ask for a quote, they will probably be more than happy to provide it for you.
However, a quote is different than an actual approval. It’s only an estimate based on approved credit (OAC).
To get a hard and fast number for you, they’ll need to secure an approval. To do that, they need to check your credit rating/score. This might be totally fine with you, particularly if you have good credit.
The trouble is, if you’re shopping around, your credit rating/score is being checked multiple times within a short time frame. Credit agencies see this as a red flag.
How Shopping Around Impacts Your Credit
Why does this look bad on your credit? It gives the illusion that you’re desperate for money. To the agency, it appears you’re struggling financially and are frantically trying to get your hands on some cash.
Creditors can’t tell if you’ve been declined or if you’re receiving money from a number of sources and you may be taking on a lot of new debt. Either way they perceive you as a higher credit risk.
So when yet another creditor does a credit check, even if you’ve never defaulted on a loan, your credit rating/score will begin to slip and cause some hesitation on their part.
Even if these creditors are still willing to provide you with financing (which many of them will), the amount they quote you might be a little higher than usual because they’ll see you as a higher risk due to your recently dropping credit score.
How to Get the Best Deal
It is always a good idea to get the best deal. So how are you supposed to get the best financing deal if you’re not supposed to shop around for financing?
Enter the finance broker. (That’s us.)
A broker with access to a wide range of lenders has a wealth of knowledge about what each of those lenders likes in a financing deal. Lenders tend to prefer:
- certain sizes of deals,
- certain types of equipment,
- certain types of businesses (new or established, specific industries, etc.), and
- certain types of credit history they are willing to take a risk on.
Some lenders have the ability to be flexible with their terms while others stick firmly to their policies.
A good broker also works hard to establish great relationships with their lenders. A good broker-lender relationship allows for the trust that’s required in order to create a healthy business deal. Sometimes, a lender is willing to step out of their comfort zone if a broker they trust is really advocating for the client.
Why Does All Of This Matter?
When you use a broker you trust, you can leave the shopping around to them, protecting your credit. Your broker has a very good idea of which lenders are most likely to provide you with the financing you need, as well as which lenders are able to provide you with a deal that fits within your budget and the terms you prefer. Your broker doesn’t need to contact every available lender – just the one or select few that are going to be your best options. This eliminates a hit to your credit rating/score.
Using a trustworthy broker allows your credit to stay intact, as well as allowing you to focus on running your business rather than spending all of that time shopping for the financing you need. Your broker can work for you so that you can work on your business.
If you don’t yet have a financing broker, we would love to help you! Don’t hesitate to contact us and allow us to work for you.
You might also be interested in:
5 Benefits of Having an Outsourced Equipment Lease Financing Department
How To Maintain A Healthy Credit Rating/Score
What Is A Credit Rating/Score?