Getting the best loan for your clients: why cost shouldn’t be the only factor
As a trusted broker, you’re in the business of people. Your main goal is to secure the most favourable financial solutions for your clients because when they succeed, you succeed. And when your clients trust you to deliver the best possible outcomes for them, they stay your client, and are more likely to refer others in their network to you. While competitive interest rates and arrangement fees are undoubtedly a part of this, it’s crucial to look beyond just the cost.
At OakNorth, we’ve always strived to focus on service: flexibility, speed, transparency, and experts that deeply understand each sector. Businesses come back to us time and again – 40% of our business is from repeat customers – because our focus is always on achieving optimal client outcomes, not just winning work. Brokers need to play the long game too. This means aiming for client retention and loyalty, which can only be achieved when your clients trust you to look at their needs holistically, and beyond the commission.
Depending on your client’s goal, there are several factors that may be as important – if not more important – than cost. Flexibility of the loan terms is one. Low-interest rates will no doubt seem appealing, but they can often be accompanied by rigid structures, and off-the-shelf products that might not be suitable if your client’s needs are more complex. A more bespoke solution may come with a slightly higher rate but could be advantageous in the long term. It may give them the option to make early repayments or adjust payment schedules, which could empower your clients to manage their finances more effectively. Depending on their business model, this could be key during the current unpredictable economic conditions.
Another factor is speed. How quickly can you get a ‘yes’ or ‘no’ from the lender? Depending on the growth ambitions of your client, time may be the most important aspect. Many lenders will take months to approve an application, or most frustratingly, to simply reject it, with no clear insight as to why. When this happens, time-sensitive opportunities can be wasted, which inevitably leads to an unhappy client. A critical part of this is transparency. How much insight will you get into the decision-making process? You’re of course working towards your client’s best interests, but no one knows a business better than the person in charge, and they should be given the opportunity to advocate for it. At OakNorth, every business we consider lending to gets to meet our Credit Committee and discuss its borrowing needs directly with the decision-makers. For us, this is a crucial part of the process as we take a forward look view when supporting growth businesses, rather than relying on outdated financials.
It might seem like a softer benefit or even a ‘nice to have’, but it is vital for a lender to provide an exceptional level of customer service to you as its partner and to your client. Will you be kept up to date on how the application is progressing, without having to chase? Will you be told upfront how long the process is likely to take? Will you have one dedicated point of contact that knows the transaction inside out? Applying for debt finance to scale a business or simply to maintain healthy cash flow, can be a stressful time for any management team, and your client needs to feel supported throughout the process. If you’re unable to communicate with them effectively because the lender isn’t communicating with you, this will have a knock-on effect on your relationship. Every broker we partner with has a dedicated Account Manager for this very reason; to ensure that your clients receive the attention and support they deserve throughout the loan process.
Reputation is also crucial. You’re no longer restricted to high street banks when seeking financing for your clients, which is fantastic, but with this greater level of choice, it’s never been more important to do a thorough review of a lender's credentials. For example, if the business is a restaurant chain, find recent examples of hospitality businesses the lender has supported. Most reputable lenders will have these case studies easily accessible on their websites, and if not, they should be able to send them to you on request. Case studies will not only give you peace of mind that the lender understands the unique challenges of your client’s industry, but they also demonstrate their commitment to help deliver positive customer outcomes.
To maintain a strong relationship with your client, you need to recommend lenders that you’re sure will work with them to achieve the best possible result for their business. While cost is undeniably important, it should not be your sole focus. By taking a more holistic approach and considering loan flexibility, approval efficiency, customer service and a lender's track record in your client’s industry, you can ensure they get the right loan to suit their unique business needs.
Really insightful, thanks for sharing!