How to Find the Right Business Loan Broker
The business loan industry operates the same way as the real estate industry. When you look to purchase a home, you hire a broker who will help you find a home. When you find a home you’re interested in purchasing, the broker helps you negotiate the price of the home, the terms of sale, and helps arrange the financing so you can close the deal.
You rely on your broker to give you advice, present you with the best options, and get you the best possible deal.
Sourcing out a business loan works exactly the same way. Business loan brokers are experts in business financing. You can rely on a business loan broker to get you the absolute best funding deal available for you in the market. They will also provide you with top inside advice not available to those outside the industry. And if that isn’t enough, they will represent you and your interests and deal with a financial lender on your behalf. In short, they always have your back.
The questions become, how do you find a loan broker that is tops in the industry, and how do you know if they are qualified?
Working with a small business loan broker helps you save time and energy. Small business owners have a lot on their plate. A commercial loan broker can assist you in finding a business loan suitable for your company’s needs and preferences.
Here are some tips that will help you locate a business loan broker that is just right for you.
Education and Experience
First, ask what kind of formal education your business loan broker has.
- Where did they go to college?
- Do they have a masters or MBA?
- Did they study finance?
Next, look for a business loan broker that has been on both sides of the table. You want a broker who has been a business lender before.
Knowing how lenders operate is important in navigating the application process. You also want to see what type of lenders they previously worked for. Also be sure your loan broker can offer advice on different products, not just one by asking questions. Satisfactory answers are generally indicators of satisfactory service.
Alternative Lending Solutions
Your business loan broker should have a variety of solutions to offer you. The solution should not be what’s easiest for them, but it should be about what’s best for you.
Ask questions about what types of programs are available to you. You want to know the pros and cons of the solutions before deciding to pursue one.
Speak up and ask about SBA Loans, Bridge Loans, Factoring, Lines of Credit, Equipment Financing, and Asset-Based Loans. A good loan broker will be more than happy to walk you through every loan option.
References and Reviews!
References. References. References.
Ask your loan broker if you can speak with one of their clients and one of their lenders. You want to know if their past clients and their partners enjoy working with them, and would they or will they work with them again.
If they don’t enjoy working with them, why would you?
Online reviews are very important. The internet makes it easy to look for a company that people like working with. If your loan broker has no online presence and no reviews, look for one that does.
Business Loan Broker Fees
Avoid upfront fees at all costs. Why should a business loan broker earn a fee before they get you a loan? Most loan brokers have a success fee, which is a fee charged at closing. A success fee is very common and aligns your interests. If your loan doesn’t close, then your business loan broker doesn’t make any money.
With hundreds of business loan brokers in the market, choosing one for your business can be overwhelming. You can narrow your search by focusing on brokers that are members of the National Small Business Association, Marketplace Lending Association, or the Better Business Bureau. You can also ask recommendations from local government agencies.
Other than that, you can shop for business loans through traditional lenders and credit unions. They offer the most competitive rates but with a stricter qualification process. Finance websites, like SMB Compass, have a team of professional loan brokers who can help business owners in finding the best lenders and loan programs.
Finding a reliable business loan broker can be challenging, but there are many things you can do to make sure you are in good hands. The simple checkpoints in this report give you a solid starting point.