Use finance broker or reach out to banks directly? (Canada)

searcher profile

May 31, 2024

by a searcher from Western University in Calgary, AB, Canada

Wondering if any searchers out there (ideally in Canada) are able to share their experience working with a finance broker. Is it worth engaging them to help assess financing options, or are most searchers better off talking to banks themselves? Understand there would of course be significant time savings with the broker approach - is that the only real benefit?

The whole concept of finance brokers is fairly new to me so I'd appreciate any insight people might be willing to share!

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commentor profile
Reply by an intermediary
from University of Toronto in Toronto, ON, Canada
The reality is every situation is different. And that means every financing is unique and distinct, based on your acquisition. As others have pointed out, each lender is also different, even if only in subtle ways. Getting a commercial loan is about building a financing case alongside your business case, and case for acquisition. Overall, people tend to underestimate (or don't fully understand) what's involved for the commercial lender to build a lending case for your loan and what you can do to facilitate that, and there can be many pitfalls to avoid.

Bottom line, there are 2 reasons you would choose to use a financing advisor: A) to outsource the work as it will take many hours; B) to leverage their experience and insight. I help educate people to understand the lending process, so if you would like materials on this, feel free to DM or email: redacted
commentor profile
Reply by an intermediary
from University of British Columbia in Vancouver, BC, Canada
Suggestion: If you are in a common industry which is generally known to be debt-funded and are also putting in a bunch of equity then maybe finance brokers can save you time. If you are doing highly debt leveraged deals with a big VTB or roll-over equity component then I would make the relations with bankers personally.
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