Does your accountant talk to your finance broker?
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For self-employed or business applicants seeking finance, never has communication between their finance broker and accountant been more important. In times of uncertainty where almost every business worldwide has been negatively impacted to some extent, banks are increasingly relying on accountants to explain the business health and future prospects of loan applicants.
Credit assessors at financial instructions are very rarely trained to be experts in reading financial statements. They receive very specific training relating to the bank’s processes for credit applications, but training on how to assess and adjust business profitability is limited. Likewise, whilst finance brokers may be experts at navigating a plethora of finance options with different policies, few possess the expertise to accurately judge a business’ financial performance and position. This can lead to situations where two inexperienced individuals are working together to resolve an issue neither party understands fully.
Due to the COVID-19 pandemic, credit assessors have more questions than ever for business applicants. It is not uncommon for mortgage brokers to have to explain what is ‘normal’ for a business, that is what do their income, expense and profit levels look like without a global pandemic affecting them. We have also seen an increasing appetite from lenders for an “Accountant’s Letter”; This is a letter where an accountant is asked to confirm any number of queries a credit assessor might have, including income, debt business sustainability. The letter can form a critical, necessary part of a self-employed applicant’s loan application. Both of these are direct examples where the finance application would be dead in the water if the finance broker cannot get support from the applicant’s accountant. Indeed,
Finance brokers and accountants may work closely together throughout all stages of the credit application process to help achieve results for clients, but particularly intimately at the beginning stages where issues of affordability are often paramount. The accountant’s expertise will allow the finance broker to go to their client with certainty regarding what income can be used for servicing, and what that translates to in terms of borrowing power.
Above are but simple examples of how a strong mortgage broker-accountant relationship can help ensure a smooth process during a finance application.
At our Greenhill Road offices, Venture Private Advisory is able to draw on the loan writing expertise of the team at Switch Financial Solutions across all manner of residential and commercial loan applications. We work closely with them as required, answering questions, and offering support for loan applications no matter how complex the client’s group structure may be. This close relationship ensures our clients are best placed to present a strong application to any lender.
If you are in the market for finance but not sure where to turn next, please do not hesitate to contact either our office or the team at Switch. We look forward to being of assistance, whatever your financial aspirations and needs.
By Matthew Siklich – Accountant – Venture Private Advisory