What Is a Business Loan Broker?
A Business Loan Broker (Commercial Loan Broker) assists small business owners in achieving much-needed funds through a network of qualified business lenders and finance sources that the individual commercial loan broker has developed a good relationship with. This type of lender is usually an investment banking firm or a venture capital firm, which has branches all over the country. A Commercial Loan Broker’s service is to provide a borrower with a unique, tailored solution for a specific need within the current economic environment. The Business Loan Broker services also include the referral of qualified businesses for suitable financing. It is also the Commercial Loan Broker’s responsibility to ensure that any information provided by the client is complete and accurate.
Small businesses often have more difficulty obtaining traditional business loans. Commercial Lender behaviour has become increasingly complicated due to recent changes in the Federal Small Business Administration’s guidelines and more importantly, recent changes in the Federal Reserve’s Regulation D. Regulators are currently examining the manner in which financial companies interact with residential mortgage bankers. The Mortgage Banking Industry in America has seen an unfortunate trend towards increased rate tightening, which has decreased access to traditional small business finance programs. In response to these tightening restrictions, the number of commercial lenders have been reducing or eliminating their commercial loan programs or severely reducing their lending programs for new commercial projects.
As a result of a reduced amount or elimination of available funding a client needs to establish a long term relationship with his or her chosen Commercial Lender. To maintain a long-term positive working relationship, the Business loan broker will continually review and evaluate the current lending marketplace to ensure that they continue to provide an adequate amount of competitive funding. In addition, the brokers recognize that there will always be a demand for their services as long as the economy remains weak.
Unfortunately for the borrower, because of the current business climate, many commercial loan brokers have decided to no longer work directly with individual business borrowers. Instead, they have decided to develop an elaborate Network of business loan brokers that they can then refer work to on a case by case basis. While this allows borrowers a greater degree of control over which lender they work directly with, it also renders the current lending marketplace less effective for small businesses. Because smaller businesses do not have the same resources as larger businesses, it is nearly impossible for them to compete for financing through all available sources.
To compensate for this situation, the best business loan broker will develop a specialized portfolio of Working Capital Providers that they can use to make key decisions regarding their business loans. Business loan brokers who have developed a comprehensive portfolio of funding sources that they can draw from when the time arises will have a significant competitive advantage over those with a limited number of business loan brokers working on their behalf. This is because a small business owner cannot simply select one lender to work with when they need financing for any purpose including the purchase of equipment, inventory, or expansion. In most cases, these types of commercial real estate loans will be based upon set criteria that must be satisfied in order for the borrower to qualify for the funding.
In addition to relying on a broad portfolio of Working Capital Providers, a small business loan broker should also have a large assortment of direct business lender contacts that they can draw upon when they need financing for any reason. A good Working Capital Broker should develop a strong networking system that provides the borrower with both access to the top-performing SBA loans and access to other top performing direct business lender sources as well. The best brokers develop a comprehensive list of direct business lender contacts that they can draw on whenever the need arises. Because they regularly review these lists, these professionals are always aware of new financing opportunities that become available. These professionals also frequently work with these qualified borrowers to ensure that they receive the maximum benefits from their financing agreements. In short, the best business loan broker service will have a complete range of direct business lender relationships that they can draw on when the borrower needs to borrow money.