Business Loans are a sensitive subject. Business owners will enter these conversations with a mix of hesitation and a little bit of skepticism. They want to make sure they’re getting a good deal from a reputable lender. This is why the lending space will always have a need for smart, helpful, business loan brokers who put their clients first. Even though business owners can do a lot of the research on their own, having a trusted advisor in your corner telling you, “Yes, this is a good option to go with,” or, “No, I’d avoid that one,” definitely goes a long way. So, whether you’re looking for a refresher on things you already know, or if you're looking for great ideas on how to grow your business, here are a few tips on how to become a high-performing business loan broker. If you're earlier in this process, read up on how to get started in the business loan broker business.
How to grow your business loan broker business
The best business loan brokers don’t just know the names of the organizations in the lending space, they have first-name relationships with people at banks, credit unions, private lenders, and tech-enabled financing companies like FinanceFuel. This is important for several reasons. First, this is a business built on trust. If you’ve met a rep in person or held conversations over the phone, you have a better sense of who you’re working with. How they treat you is how they’ll treat the customer you're referring to them. And by having these relationships in place, when you client asks if you could arrange a meeting you can say, “Yeah, I’ll call them now, get something set up right away,” vs. having to hope that, “I can’t get a hold of them over there.” Next - begin marketing your services. LinkedIn is a great way to do this. And I don’t mean running ads, but sharing articles, sharing your own thoughts in blog posts or even videos. Stay top of mind so that when a business does need help they remember, “Oh yeah, I remember reading their articles on LinkedIn.” Once you have leads, now it’s time to vet out which ones are good fits and what channel would work out best for them. Options to choose from and evaluate:
- Revolving Lines of Credit
- Revenue-Based Loans
- Term Loans
- Preferred Lender SBA Loans
- Equipment Funding
- Merchant Cash Advances
- Invoice Factoring
- Asset-Based Loans
- Credit Card Stacking
And there's more. Or you may only bring up a few of the options. You know your customers better than anyone, and you know the connections you've made in the lending industry. Referring your customers to a trusted partner offering the right product for that customer is part of the art of being a loan broker.
How to find direct funders and build relationships
Referring your customers to direct funders is where you can make the most money. Direct funders like FinanceFuel give you a percentage of future profits earned from your customer. This is opposed to referring your customers to another brokerage or aggregator. If you do that they'll take a cut off the top of the percentage they're earning from the direct funder. It's going to be valuable for you to take the time to form relationships with direct funders yourself.Building relationships is always best to do in-person if you can. Head to local events. Consider joining a networking group. Join the local chamber of commerce.But some of the options will be out-of-state. No real issue here in the age of technology. Just send an email or give them a call. Lenders will want to reach back out to you since you are a big part of their salesforce/marketing team. If they don't treat you like you're a valuable and trusted partner, you should reconsider sending customers their way because how the lender treats your customer reflects directly on you.
What to avoid
Trust is your currency and primary value as a business loan broker. If there’s a lender you don’t feel comfortable connecting your client with and your only reason is, “My gut just doesn’t feel right about it,” always trust your gut. Better to play it safe vs. recommending someone who doesn’t work out for your client. The result is a client that says, “Yeah, I worked with so-and-so, they connected me with this terrible option.” On the flip side, knowing the market, building all of the relationships, only working with options you trust will build your credibility fast. “Oh, I love our business loan broker. Always points us in the right direction. You should definitely work with them.” You’ll be amazed at how small the business lending world is and developing a strong reputation is the best form of marketing you can do.
Questions that customers will ask
A few common questions you’re likely to receive:
- What type of business financing is right for me?
- What will it take to get approved?
- Do I have to sign a personal guarantee?
- What’s a business line of credit?
- Which type of loan is best for me?
- What is the interest rate? Annual percentage rate? What will I have to pay?
- What’s a term loan?
- Are there any hidden fees?
- How do I do equipment financing?
- What is invoice factoring?
- How do I do invoice factoring?
- Is invoice factoring a good option for where we are at?
- How much time will this list
- What’s a good local spot for pizza (Sorry, just had to make sure you were still reading. But, if you’re a trusted advisor, it's a great sign if you're getting this type of question!)
One other piece of advice, address the “unanswered questions.” People are naturally shy about anything finance. It’s like visiting the doctor, people don’t want to ask a “dumb question.” So your client may say they don’t have any questions, but in reality, they might not understand things like: How do interest rates work? What is Accounts Receivable financing? What is a line of credit? Over-educate. Over-communicate. Coach. Simplify everything. This way you’re answering the questions they might be too shy to ask or don’t know to ask. The better educated your client is, and the more you're responsible for that education, the more referrals you'll get from that client. The client will feel better empowered to run their business and that is all thanks to you!
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