FYI - I trust my banker for everything, why should debt be any different? It should and here's why...

Many investors, especially those who have been in the game for a while have long-standing, even entrenched relationships with their bankers. Whether it is a single bank or across multiple, these relationships have been developed over years of transactions and business banking services. Often, when a businessperson comes across a situation where they want to borrow money, they will look to their long-time banker to come up with the solution.

We can hardly blame them for this. After all, historically they have turned to one of their bankers for all of their other monetary needs, usually with acceptable outcomes, why should they approach a debt scenario any differently?

Well, they should, and here's why:

I have had countless conversations with experienced investors who have the aforementioned banking relationships. One common theme throughout these conversations is that the investors are very confident they know what the best loan offers are because their bankers have told them so. Equally as common is how misinformed they actually are. From LVRs to interest rates to interest free periods etc, their picture of the market is so narrow that they are totally unaware of how outdated or inaccurate their mail is.

The bottom line is that by asking your regular business or private banker for loan offers is like looking at the market through a keyhole. There are far more lenders than just the big 4 banks and most people we talk to, regardless of how senior or experienced, are only aware of a small cross-section of them. Moreover, they have no idea that many lenders often have far more compelling offers than their individual banks do.

We're a commercial brokerage so obviously we're biased. But if you could canvass more than 50 lenders for each borrowing scenario you'd realise the level of variety there is in the debt market. You'd see how important it is to have a broad approach that goes well beyond any single lending institution. Obviously it's impractical to expect that from you...who has that kind of time? Well we do. So next time you have a project or want to make an investment that involves some debt, stop and think - am I doing myself a disservice if I speak only to the bankers that I know?