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Loan Broker Information
How To Become A Loan Broker
Becoming a broker is taking a step into an exciting world where no business venture is ever the same. Brokers cover a wide variety of services – from commercial loans to finance, to buying and selling whole businesses. Brokers are rarely at a loss for business, and it is probably one of the steadiest fields to be in, provided you keep up with the market.
There are a variety of online broker courses and loan broker information that can assist with letting you become a loan broker and can provide you with a quick and intense education of the specific industry that you choose.
What Is A Loan Broker?
At its heart, a broker is a facilitator. One party needs a thing, the broker assesses those needs, and then brings other people to the table to negotiate an agreement. In the case of commercial loan brokers, a business owner may need working capital, and the broker sources lenders and investors to get that money. It should be noted that many traditional lending institutions (banks) cannot always get a business owners the amount of money requested within the necessary time frame due to their own limitations and restrictions – and that is where the broker’s ability to find alternative lending methods and sources really shines.
How Brokering Works
One of the biggest qualities of a good business finance broker is the ability to listen. If a business owner needs money, the broker needs find out how much, what the money will be used for, what the business offers its clients, and the potential return for investors. Taking that knowledge, a good business finance broker will then seek out potential lenders and explain the client’s situation, and why investing in or lending money to this business would be a good choice. The broker then becomes a liaison between all parties involved, going back and forth, pulling everyone together to a point where they are all shaking hands over a loan agreement. At the end of the day, the business broker takes a fee for services rendered, and everyone leaves the table satisfied with a job well done.
Flying Solo
When a person learns how to become a broker, the next decision is whether to sign up with a brokering firm, or become an independent agent. Brokering firms employ lots of people, and will even furnish employees with tools to start closing deals for their clients, no matter where their employees live. The work is steady, but the commission for closing is lower than a person would get if brokering as an independent agent.
To be an independent business finance broker, a person must be highly organized and motivated. Commercial finance brokers need to seek clients and make their presence known, and be willing to compromise or negotiate on behalf of all parties in order to reach an agreement. The main advantages to being an independent finance broker are that you can operate on your own schedule and terms, build a portfolio of clients who will in turn refer people to you after successful deals are made, and the fees you get are not split between yourself and a large firm – all profits are yours.
Loan Broker Fees
The toughest part about becoming a business finance broker is charging a fee that is not only adequate for the amount of time and energy you are putting into a deal, but also one that will not drive away business because it is considered too high. The advantage to having your own business as a broker is that your overhead is low, so you can offer your services as a rate that will undercut the competition, plus still give you a very healthy profit margin. For example, if a business needs working capital in the range of $300K, and you close the deal with a broker’s fee of 5% , then you will be walking away with $15K, plus any additional fees you are owed that have been written into the contract. The basic rule for independent business finance brokers is to charge a lower percentage for larger money amounts – or set a cap or flat rate to encourage clients to come to you, knowing they will be able to get the services they need, while only having to pay a little extra to you directly. There are some independent brokers who operate out of their homes, meet with clients, close a few deals and take the money to buy houses, go on vacation, or reinvest it in a business simply because the broker’s fees from a few deals are more than they were making in a year working for someone else.
How To Become A Commercial Finance Broker
Becoming a business finance broker requires a good foundation in how lending works, along with how businesses, investors, and lenders can work with one another to ensure the needs of all parties are met. Becoming a broker does not require a degree, but there are many sources for reputable loan broker information – entry level positions at firms, night courses, and The Commercial Capital Training Group (which will give you the tools and introduce you to a network of lenders) – to get the training and resources you need to start running your own business broker business. If you are willing to take that big step from working for someone else, and start bringing in an income that will surpass your current salary for less time and effort, you should look into becoming a business loan broker or commercial finance broker today.