Until you’ve actually tried to secure capital for a business, you may not completely be able to relate to my answer to this question. Securing business capital can be complex, frustrating, and difficult at times for the following reasons: 1) borrowers needs don’t fit closely enough to a lender or investor program; 2) lender or investor criteria and/or application of criteria can change suddenly as their portfolio changes; 3) secondary elements like appraisals, environmental assessments, recourse agreements, and other third party requirements can increase cost and time to close.
Taking into consideration the above statement, there are basically three ways to access business financing.
You can contact lenders and investors directly, work through a broker, or work with a financing specialist (basically a value added broker).
If you plan to manage the process yourself, make sure you have sufficient time to devote to the cause. If there is a rule to go by, the smaller the dollar amount, and the simpler the application of capital, the more likely that you can self manage the process yourself.
As deal size goes up, so does complexity due mainly to higher risk assessment and lender requirements.
Depending on what you’re trying to secure capital for, some sources of financing can only be accessed through a broker, so a self administered approach can also result in a smaller market and potentially sub optimal alternatives.
The broker versus financing specialist distinction is a personal characterization of the market. Many business owners and managers start out seeking business financing on their own. If they are unsuccessful, they will try to find an intermediary to assist them.
And like most industries where brokerage is involved, there is the good and bad, the high value added and the no value added. Most brokers (my opinion) do not have the ability or knowledge to work in your best interest and are mostly focused on collecting as much information as they can from you and getting it in front of as many sources of capital as possible in the hope that one of them gives you money.
While its important to qualify a lender or investor to make sure you are focusing your efforts with relevant lenders, the same holds true for brokers and financing consultants.
A capable broker or financing consultant has the ability to determine what sources of capital are relevant to your needs at a specific point in time, has the ability to access said sources, and can assist you in properly applying and closing the deal so you get funded.
If you can project manage the process yourself, by all means do so as it will likely be a very rich learning experience that can benefit you in the long run.
If you get bogged down or realistically don’t have the time to manage the process of securing business financing to completion, then take the time you have and qualify those individuals offering their services to assist you. The right financing specialist can more than save you what they may end up costing you both in terms of dollars and time.