When searching for funding, you have two options. You can either work with a finance broker or go directly to a lender. They both play important roles in helping you obtain the financing you need, but they are two very different entities. Understanding the key differences between the two can help you make a more informed decision about the best financing path for your needs.
What is a Broker?
A broker connects individuals seeking finance with multiple lenders, offering access to a range of funding products. Acting as intermediaries, brokers source funding from lenders and help to arrange the facilities for a commission. They find the best deals and negotiate favourable terms. Brokers work with lenders offering different rates and product options, guiding borrowers through the complexities of securing funding.
What is a Lender?
A lender is an individual, corporation, or bank that provides funds to a borrower. In return, the borrower repays with interest over a set period. Lenders set their own criteria and terms, including loan amount, collateral, fees and interest rate. Lenders work with brokers who introduce them to businesses that are in need of finance.
Benefits of using a lender for finance
- Better communication: Working directly with a lender gives you a direct line to the decision-makers. This could mean quicker responses, and access to support whenever you need it.
- Potentially lower fees: Brokers may charge a fee for helping with your application and connecting you to a lender.
- Faster process: Potentially quicker approval process as you will be applying directly to the lender.
Benefits of using a broker for finance
- Better terms: Using a broker means you could get better terms and interest rates as they will compare deals from multiple different lenders instead of just one.
- More finance products: Working with a broker means you will have access to better funding options through their extensive lender networks.
- Save time: Partnering with a broker will mean you will save time researching the best lender as they will do it for you.
Main difference between a lender and broker
The difference between a broker and a lender is that a broker doesn’t lend money, while a lender does. Brokers act as middlemen, helping borrowers find and apply for finance from various lenders in exchange for a commission. Ultimately, choosing between a broker and a lender depends on your preferences, whether you want a more hands-on approach with personalised funding options or if you already know the product you want, you can approach the lender directly.
Get started with Time Finance
At Time Finance, we are an independent lender that partners with brokers to provide businesses all across the UK with flexible finance solutions. We can provide businesses with a range of funding options including invoice finance, asset finance, secured loans and asset based lending. Get in touch with our team today to explore how our financing options can help you.