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

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

2yrs ago

Use finance broker or reach out to banks directly? (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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reply by a searcher 2yrs ago
from Bowling Green State University in Surrey, BC, Canada

Thanks ^redacted‌
It really depends,
If we're talking about a small acquisition (lifestyle/buy-a-job level), start with your current bank and they'll steer you to a small business banker who can give you an idea. Between chartered banks, there likely won't be huge differences in terms so maybe try one more for a quick comparison shop.
Then, reach out to BDC and you see the option that may give you a bit more flexibility but it will cost a bit more.
If it's a larger acquisition (enterprise/investor-supported), you may want to bring in a buy-side advisor who will help with diligence, negotiations, process, etc. and should have a few referrals at the ready for a warmer intro to the mid-market teams at the banks.
If it's a really weird deal that is basically otherwise unbankable, then yeah, get with a broker to potentially source private lenders.
My day job is a lender for BC credit union and I was with BDC for years, happy to chat a bit more specifically if you like - send me a note on Linkedin

reply by an intermediary 2yrs ago
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