A Day In The Life Of A Business Loan Broker
Do You Have What It Takes To Lend Businesses Money
Not many people understand what a business loan broker is, or what one does. A loan broker is part bargain hunter, part facilitator, and part mediator, all rolled into one. Every client is different, and every situation is unique. But before we get to what a loan broker does, we need to take a look at the world of commercial finance and why people need business loan brokers.
Why People Use Business Loan Brokers
Business loan brokers work with commercial and private investors. Quite often, entrepreneurs and commercial real estate investor are turned down for traditional loans from banks and similar institutions – usually through no fault of their own. Banks have certain requirements and internal limitations which can prohibit loan approval. When the economy takes a dip, and even well after it recovers, banks tend to raise the requirements for loan approval as a means of weeding out any requests that are deemed “too risky.” Unfortunately, this blanket approach ends up marginalizing emerging and small business owners who would otherwise have a great shot at success. Requirements such as impeccable business credit ratings and a long history of financials can quickly exclude entrepreneurs from approval.
In order to remedy this, the world of commercial finance offers a number of affordable and accessible alternative lending products to business owners and property investors who would otherwise get turned away from banks. However, commercial lenders cannot always be on the lookout for prospective clients. Similarly, most entrepreneurs do not know how to get in contact with commercial lenders. Some business owners do not even know that commercial lending is a viable alternative to bank loans. This is where the business loan broker comes in.
Business loan brokers have a number of tools at their disposal in order to attract potential clients and work with them. First and foremost is the ability to listen. A commercial broker must fully understand the needs of their clients. This includes the amount of capital needed, the scope of the project, and the end goal. Additionally, a loan broker must be able to read between the lines, or listen contextually. Sometimes there is a reason for having poor or damaged credit. A sudden setback or downturn in the economy can cause a hiccup in revenue. Once all of these boxes are checked, it is time to gather information.
Information A Business Loan Broker Needs
When working with a client, a business loan broker will need a credit report, a list of assets (property owned by the business or business owner, including real estate, vehicles, equipment, and receivables), financial history ranging from six months to two years, and anything else that meets the basic requirements of the commercial lending product that best fits the client’s needs. In the case of independent commercial real estate investors, a business loan broker may require personal bank statements, because most independent investors and property developers do not draw a regular paycheck, and rely on revenue from flipping houses, rent from tenants, or receive capital only after construction projects are completed.
Making That First Match
Once a business loan broker receives all the financial information from their clients, it is time to play matchmaker. There are dozens of commercial lending products available, and it is up to the business loan broker to find the options that best suit the client’s needs. For example, if an emerging business owner needs funding, a loan broker might suggest an SBA loan. If a business is having cash flow problems, the broker might steer them toward invoice factoring. If a commercial real estate investor is looking to develop a large apartment complex, then a mezzanine loan might be in order. With all of the different commercial lending products available, and the ability to tailor them to fit the client’s needs, it is almost impossible not to match a loan with a client.
The Second Date
After the business loan broker has taken the client’s information, and has done the research to see which loan is the best match, it is time to talk with the actual lenders. Lenders and private investment networks each have their own specialties. Some will specialize in small business loans. Others will only deal in working capital solutions. Some work with unsecured lines of credit. Others only offer high-end loans for large commercial real estate projects and leveraged buy-outs. The business loan broker will shop around and try to find that perfect match for their client. The broker will present the client’s information to the commercial lenders to see if their financials meet the requirements. If they do, then it is time to move onto the next step. If they do not, then the business loan broker will seek out alternatives, or make a strong case in their client’s stead by explaining the context (see above) surrounding why they fall short on the financials, and push for approval.
Presenting The Options
Having contacted various lenders, the business loan broker then returns to the client to present the viable options available. At this point, the client may ask some basic questions about the various financial solutions. The loan broker will work with the client to go over which options would work best to help them achieve their goals, as well as the ramifications and stipulations of each solution. The point of this exercise is to help the client choose the lending product that best fits their needs, while still keeping them financially solvent. Once the client makes a choice, it is time to introduce them to the lender.
Introductions And Mediation
Now the business loan broker will act as an intermediary between the client and the lender, as they work out a deal. At this point, the client should have a list of requirements, and so should the lender. During this stage, the business loan broker will go over the specifics of the financial agreement to ensure that the client fully understands what they are signing, how much funding they are receiving, as well as the payment terms and interest rates. It is not unusual for clients to bring their attorneys into the picture, to go over the language of the agreement, and any finer points which may have been overlooked.
A Business Loan Broker Is A Very Lucrative Career
In addition to helping clients, lenders will pay a business loan broker handsomely for bringing business their way. Typically, a business loan broker will take home a percentage of the overall deal. Depending on the type of lending product used by the client, a business loan broker can generate residual streams of revenue, which can guarantee a sizable monthly income, in addition to the larger deals. Commercial lenders will also protect loan brokers, by steering clients their way. Most commercial lenders will not do business with clients directly. They will use business loan brokers as a “translator” of sorts, to convey the needs of the client to the lender, and the specifics of the agreement back to the client. Some lenders will even work exclusively with certain business loan brokers, and have them work with potential clients as a screening method.
No Two Agreements Are The Same
From the first meeting with a client to the final signature on a contract, a business loan broker will experience a series of unique and satisfying events. Every client will expose the loan broker to new stories and interesting businesses, giving insight into what truly drives our economy. Some business loan brokers get so good at their jobs, that they begin to make their own hours while enjoying revenue equivalent to an upper-end full-time salary. Becoming a business loan broker is more flexible than becoming a traditional bank loan broker, which is a very rigid job role that is restricted to only a few lending products.
The Commercial Capital Training Group
If you have a knack for dealing with people, understanding their needs, and helping multiple parties come to an agreement, then the world of commercial finance might be just the thing you need. At the Commercial Capital Training Group (CCTG) we provide our graduates with the knowledge and training to bring lenders and business owners together. We will set you up with your own business, complete with your own branding, and marketing tailored to your specialties.
Our recession-proof business model and nearly unlimited earning potential can put you on the path to financial independence. Through courses from CCTG, we will introduce you to our private network of lenders, and we will provide you with personalized support around the clock. We will teach you how to close deals and build up streams of residual income. You get to work from the comfort of your own home, set your own hours, and make your dreams a reality.
If you are tired of working for someone else, and are looking for a lucrative business opportunity with a built-in support system, contact the experts at the Commercial Capital Training Company today.