Small business owners shop around for the best loan terms and lowest interest rates and fees when they need funding. One way they do this is by working with business loan brokers, who have access to multiple lenders of all sizes. Loan brokers work diligently to match business owners with the best lender for their unique needs and financial situation. In addition to negotiating with lenders on behalf of their clients, brokers may also advise how to improve an application or make it more attractive to lenders.
Business loan brokers work for themselves and earn money by charging their clients a small percentage of the total loan amount. If you enjoy working with people, have a passion for finance, and want the freedom to be your own boss, you may consider a career as a business loan broker. This Balboa Capital blog article explains how to become a loan broker and what it takes to be a successful broker.
Business loan broker job responsibilities and tasks.
As mentioned earlier in this blog article, the primary responsibility of a business loan broker is to match borrowers with lenders. Brokers work with banks and other financial institutions to evaluate the creditworthiness of applicants, collect and verify information about them, and negotiate terms for loans. Over time, business loan brokers build a network of lending resources, which gives them more options for their clients.
Loan brokers also help business owners understand their credit scores and debt-to-income ratios to make informed decisions about what type of business loan they should get. This is helpful to business owners who want to know how much they can borrow and how much they can repay. Lastly, loan brokers keep an open line of communication with their clients via telephone or email.
What you need to get started as a loan broker.
You can become a business loan broker with a high school diploma or a GED. That said, having a bachelor’s degree in finance, business administration, or economics will expand your knowledge. Once you have decided to become a loan broker, you will need training. You can check online to learn about the various online and in-person broker training programs that are available.
Typical broker training programs take 1-2 weeks to complete, and you will learn how to evaluate and assess loan applications, network with lending sources, and market your broker business. More extended programs are available if you want training that covers more topics.
Some states require brokers to be licensed, so check online to learn the guidelines and requirements for the state in which you live. A business accountant or attorney will also be able to guide you in the right direction when it comes to licensing.
Starting your loan broker business.
Once you’ve finished your broker training and you are ready to start your broker business, there are some things you need to do. You can start by choosing a business name and business legal structure. Next, if the state in which you reside requires a broker license, make sure you apply for one. An Employer Identification Number, also known as a business tax ID, is mandatory for some small businesses, so consult with an accountant or attorney to see if one applies for your business.
It is worth noting that an EIN offers several benefits. For example, an EIN separates your personal and business finances, helps prevent personal identity theft by keeping your Social Security number private, and streamlines tax deductions and business tax filing. In addition, some banks require EINs to open business bank accounts and apply for loans or other types of business funding.
Then, you will need to apply for a local business license and create a business bank account. A business bank account makes it easy to monitor your finances and record your expenses.
Get the word out.
Once your loan broker business opens, you need to market it on an ongoing basis. Consider contacting small companies that might need loans or participate in a business loan broker program from a well-regarded lender. Other ways to get the word out include joining local business groups, participating in loan broker trade shows, and marketing your business on social media. LinkedIn presents you with an excellent opportunity to connect with business owners; the site also has loan broker groups that you can join.
When you start your broker business, you will probably spend a lot of time and effort marketing it and not see an instant return. Don’t get frustrated, as this is common among brokers. Instead, keep growing your network, and you will see positive results from your marketing and advertising efforts.
Achieving and maintaining success.
To become a successful business loan broker, you need to have a strong understanding of the industry and be able to translate this knowledge into a language that is easy for clients to understand. You should also be able to find the best deals for clients, which may require you to research different lenders and compare their rates.
It would help if you also were an excellent communicator. You need to know how to present yourself professionally and speak with clients about the details of their loan options in an informative yet understandable way. By providing top-notch client service, you can earn repeat business, generate referrals, and increase your revenues.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.