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Assessing Bank Funding Offers

Assessing Bank Funding Offers - Lily Head Finance

We all know what a ‘middleman (person)’ is, right?  And leading on from that the expression ‘let’s cut out the middleman’.  It is a euphemism for eliminating a person or organisation from any kind of deal or negotiation because you think they offer no value, or you can perform their role for free.

It can be a compelling message.  At Lily Head Finance we are unashamedly ‘middlemen’.  But we also regularly review our offers so we  can identify changes we can make to continue to add outstanding value to our clients business ambitions.  Whether that is to own a dental practice(s) or enhance their dental practice with resources which requires capital investment.  So you should consider in detail the value of a finance broker when assessing bank funding offers.

We all have a relationship with a bank.  If you have an established relationship with your bank, then it can be a tempting proposition to reach out to that bank for your funding requirements.  It cuts out the ‘middleman’, you only have to review one proposal (assuming they accept your lending proposal), and away you go.

In our opinion the ‘savvy businessperson’ should always position themselves to be able to select the best solution, not just a solution.  Particularly when agreeing something like a long term loan.  The terms of which will have an influence on your business for the next 15-20 years.  You should always be assessing bank funding offers and not basing your decision on one solitary proposal.  Even if it is from a bank you have used before.

In it’s simplest form.  If you borrow £750,000 repayable over 15 years, every 0.25% you pay above the ‘best rate available on the market’ will cost you an additional £14,228 over the period of the loan.  Or an additional £79 per week, every week, for 15 years.

Assessing Bank Funding Offers

By appointing a finance broker like Lily Head Finance, you will immediately have three advantages over those who decide they don’t need a finance broker, or that they can do it themselves.

  1. A lending proposal which is >90% likely to be accepted by lenders.
  2. Multiple offers from lenders to consider.
  3. An analysis of those offers which will enable you to make the most informed decision.

Let’s consider the due diligence your finance broker will help you with.  You can then decide if these functions reflect your core competencies.

You Get One Shot

When you take a lending proposal to a bank.  They will review it and give you a go / no go decision and the terms under which they will do business with you.

If you get a no go or do not think the terms are favourable you cannot take the same proposal back to that bank.  Either individually or even if represented by a Finance broker.  It is essential you always put your best foot forward.  There is a reason why >90% of our proposals are accepted by lenders.

No two offers of finance are the same and there is no substitute for a competitive tender if you are looking to fund a sizeable project.  This tender can include your existing Bank, and the process will ensure that all the lenders have identical information on which to base their offer.

Your finance broker will prepare a very detailed review of each offer with explanations of banking jargon in plain language.  Your finance broker will make a recommendation based on their market knowledge.  But you will also have enough, quality information to make an informed choice of your own.

Here are some of the features of your offers your finance broker will be reviewing with you.

  • Structure
  • Cost of funds
  • Commitment
  • Transaction Costs
  • Lenders Security requirements
  • Any financial covenants
  • Early repayment penalties
  • Life and Income protection provision

So, in answer to the question, ‘What value can a middleman deliver to us?’  I would say a good deal.  But I would recommend you contact us so we can talk about what will apply to you.

Please Contact Us if you would like to talk more about obtaining the #dental practice funding you deserve.

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