How to Choose a Business Finance Broker: 10 Questions to Ask Before You Commit

A good broker knows who's actually lending right now, to what sectors, and on what terms. Lender appetites change monthly. A lender aggressive on property last quarter might have withdrawn this quarter. The broker knows this because they speak to these lenders daily.

How you present your requirement matters enormously. The same transaction can be structured as senior debt only, senior plus mezzanine, asset backed, revenue based, or equity. Each has different costs, approval likelihood, and implications. A broker's job is structuring for optimal approval and terms.

Lenders provide indicative terms. Good brokers negotiate. Rates, arrangement fees, legal cost caps, early repayment terms, extension options – all negotiable. A broker arranging £50 million annually has leverage you don't have making one application.

Keeping deals on track from application through to completion. Chasing valuations, coordinating solicitors, resolving issues that arise, managing drawdowns. The unglamorous work that determines whether deals complete on time or drift for months.

When issues arise mid transaction, a good broker finds solutions. Valuation comes in low? Restructure the deal or find a lender with better valuation panel. Planning condition emerges? Identify lenders comfortable with that specific condition. This is where brokers earn their fees.

Why it matters:

Broker value comes from access. If they work with 5 lenders, you could approach those yourself. If they work with 100+ specialist lenders (many of whom only work via brokers), they're providing genuine access.

Good answer:

"We work with over 100 lenders for this type of finance. Obviously we won't approach all of them for your deal – typically 3 to 5 are most suitable for any specific requirement. But having broad access means we can find the right fit rather than forcing your deal to fit one of our limited panel."

Red flag answer:

"We work with one or two key partners who give us great rates."

(This isn't a broker, it's a tied agent. You're getting whatever those one or two lenders offer, not market comparison.)

Why it matters:

Generalist brokers who "do everything" typically do nothing particularly well. Specialists have deeper lender relationships, better market knowledge, and proven track records in their niche.

Good answer:

"We specialise in property finance (bridging, development, commercial mortgages) and corporate finance (private debt, acquisitions, working capital). We don't do consumer mortgages or car finance because that's not our expertise."

Red flag answer:

"We arrange all types of finance for all types of clients."

(Impossible to have genuine expertise across consumer lending, commercial property, corporate finance, asset finance, and everything else. They're generalists with surface knowledge.)

Why it matters:

You need to know if they're incentivised to recommend what's best for you or what pays them best. Complete transparency is non negotiable.

Good answer:

"We charge a success fee of 1.5% of the facility, payable on completion. Some lenders also pay us commission (typically 0.5% to 1%), which we fully disclose. Our total remuneration on your deal would be approximately 2% of the facility. Here's our terms of business showing this clearly."

Red flag answer:

"Don't worry about our fees, the lender pays us."

(Vague and evasive. You need to know total costs including hidden commissions that might influence their lender recommendation.)

Why it matters:

Not all deals get approved first time. You need to know they have backup plans and won't abandon you after the first rejection.

Good answer:

"We'll have identified 2 to 3 suitable lenders before we submit anywhere. We present to the best fit first. If they decline, we understand why and adjust our approach for the next lender. We rarely rely on a single option."

Red flag answer:

"It won't be declined, we're confident in this lender."

(Overconfident and naive. Professional brokers know that deals can be declined for reasons outside anyone's control. Having no backup plan is unprofessional.)

Why it matters:

Anyone can claim they arrange finance. You need evidence they've actually done what they're claiming they can do for you.

Good answer:

"Last month we arranged £2.3 million development finance for a first time developer in Manchester. Completed in 4 weeks from initial enquiry to funds released. Previous month, £750K bridging for chain break in 9 working days. Here are anonymised case studies showing the transaction types, amounts, timeframes, and challenges we overcame."

Red flag answer:

"We've arranged lots of finance but can't share specifics due to confidentiality."

(Confidentiality doesn't prevent sharing anonymised examples. This suggests limited track record.)

Why it matters:

Organised brokers have clear checklists and processes. Disorganised brokers make it up as they go, creating delays and frustration.

Good answer:

"Here's our information checklist for this type of finance. We need items 1 to 5 to provide an indicative quote. Items 6 to 12 we'll need for full application. I'll send this to you via email so you can gather everything systematically."

Red flag answer:

"Just send me what you have and we'll see what else we need."

(Unstructured approach that will lead to multiple requests for "just one more thing" and endless delays.)

Why it matters:

Realistic timelines help you plan. Overly optimistic timelines create false expectations and poor decision making.

Good answer:

"For this type of facility, typical timeline is 3 to 4 weeks from full application to funds released. That assumes valuations complete within 7 days and no legal complications. If you need it faster, we have lenders who can complete in 10 to 14 days but rates will be slightly higher. What's your deadline?"

Red flag answer:

"We can get this done in a few days, no problem."

(Overpromising. Even the fastest lenders need time for valuations and legal work. Unrealistic promises suggest inexperience or dishonesty.)

Why it matters:

FCA regulation provides consumer protections and ensures minimum professional standards. Note: Not all finance broking requires FCA regulation (unregulated bridging, commercial finance), but you should still ask.

Good answer (regulated):

"Yes, we're FCA regulated. Our FCA number is 123456. You can verify this on the FCA register."

Good answer (not regulated):

"The finance we're arranging for you is unregulated commercial lending, so FCA regulation doesn't apply. However, we're members of the NACFB (National Association of Commercial Finance Brokers) which sets professional standards for our sector."

Red flag answer:

"We don't need regulation, we're introducers not brokers."

(If they're providing advice and arranging finance, they probably should be regulated or at minimum have professional indemnity insurance and trade body membership.)

Why it matters:

This forces them to articulate their value clearly. Good brokers can explain exactly what they bring beyond what you could achieve direct.

Good answer:

"Three main advantages: First, 70% of our lender panel only work through brokers, you can't access them direct. Second, our relationships typically get you 0.1% to 0.3% better rates than direct applications. Third, we save you 40 to 60 hours of work researching, applying, and managing the process. The honest answer is you could do this yourself, but it would take longer and likely cost more overall."

Red flag answer:

"Lenders don't work with direct applications, you have to use a broker."

(Factually incorrect for many lenders. Sounds defensive rather than confident in their actual value.)

Why it matters:

Reveals whether they're building long term relationships or just transacting. Good brokers stay in touch, help with variations, support with future needs.

Good answer:

"We stay in touch throughout your facility term. If you need extensions, variations, or help with exit refinancing, we're here. We typically contact clients 3 months before their facility expires to discuss exit plans. Many of our clients are repeat users who come back for their next project."

Red flag answer:

"Once it completes, you deal with the lender directly unless you need something else."

(Transactional only. Good brokers maintain relationships and provide ongoing support.)

Most common structure. Broker charges 1% to 2% of facility on completion. You pay nothing if the deal doesn't complete. Aligns broker interests with yours (they only earn if you get funded).

Typical: 1% to 1.5% for straightforward transactions, 1.5% to 2% for complex or challenging deals.

Some brokers charge an upfront retainer (typically £2,500 to £10,000) plus reduced success fee. The retainer covers initial work and is usually offset against the success fee if the deal completes.

When this makes sense: Complex transactions requiring significant upfront work (large corporate financings, restructuring, multi facility arrangements).

Some brokers take commission from lenders only and charge you nothing. Sounds attractive but check they're genuinely whole of market, not just recommending the lender paying highest commission.