Commercial loan brokers are an intermediary between a business seeking funding and a lender. Thus, the commercial loan broker acts on behalf of their client.
An established relationship with a bank or not knowing the market rate for a particular type of funding is why a broker is essential when seeking a business loan. Any business loan taken could end up being overpriced, and that could be very expensive indeed.
An experienced broker will have established relationships with several lenders and be familiar with any lending criteria. As a result, the right lender could be targeted for any business requirement and circumstance, therefore maximizing the chances of a successful application.
How to approach a commercial loan broker?
Banks often turn down commercial loan applications before customers approach brokers, sometimes even more than once!
There are many reasons for this, but some may be as simple as the client making a poor presentation of the business plan, inadequate security, or possibly the client being considered subprime by the bank lenders. However, after exhausting the banking route, many businesses do not know where to turn.
It is possible that the financial requirement would have been placed with the right lender if a commercial loan specialist had been contacted in the beginning!
Is a commercial loan broker a good choice?
The broker should be interested in learning about your business and plans before contacting any lenders.
Business proposals with financing potential will be packaged, selected for suitable lenders, and priced competitively.
Business loan brokers typically earn commissions on loans placed by their firms, but they are not always required to do so; some will always demand fees, others only when a commission is unavailable.
It is vital that a fee is based on success, and upfront fees should be avoided as much as possible! This might be an exception if your intermediary offers this service, but no business plan exists.
How to become a commercial loan broker?
A commercial mortgage broker doesn’t require rocket science, but it takes time to establish yourself and gain the necessary expertise. Be wary of sources who tell you how easy it is.
The importance of having a solid lender network for business finance cannot be overstated. First and foremost, you have to be familiar with their programs.
To know what they like, you need to look beyond the matrix. Building solid relationships with your colleagues is also crucial. Getting things done quickly and thoroughly is vital. Keep your files at the top of their pile. For more information visit our website!
