Any business looking to get a loan from a bank may find it hard to find the best deals available. Finding different offers is, unfortunately, very time-consuming. When you are running a business, time becomes one of the most valuable resources you have, next to money. You can do only so much with your time throughout the day.
This is why people who are growing their own business should consider hiring help to save time and money whenever possible. If you think it’s time to start building your business, but you need financing—and you don’t have the time to go asking questions at various lenders—then you might want to consider working with a loan broker.
Loan brokers are great for business owners that are crunched for time and need assistance in finding financing at reasonable rates. Not only can they help you find fantastic loans, but they can also help you concentrate on what matters most, which is your business.
If you find the right loan broker, they can save you time, energy, and stress.
What is a loan broker?
When running a business, most entrepreneurs don’t have the time to do this work. They are usually taking care of their own business and making sure that their ship is running efficiently. By not having the time to finding the best business loans, entrepreneurs can find themselves in a tight situation.
A loan broker is a person that can help you find a loan or any type of financing to get your business off the ground. They have built up years of connections and have a deep network within this industry to find you the perfect loan. A good loan broker knows a good deal when they see one. While you concentrate on your business, they focus on finding you the best loan possible.
Loan brokers work as an intermediary between the banks or lenders and the business owners.
Finding a business loan that fits your needs can take up a lot of time, so hiring a loan broker can be the perfect option for you.
About loan brokers
Loan brokers will take your information and apply for business loans for you for a fee, of course.
Before filing your application for a business loan, they may ask you to present certain documents.
For instance, if you’re looking to get a business loan, then a loan broker might ask for a comprehensive business plan along with other requirements that demonstrate how you will use the loan to reach your goals and, ultimately, pay back the loan. They make sure that all the information you provide them with is accurate and honest.
After this, the loan broker will typically write up a profile on you or your business (or both). This profile will layout your credentials as an applicant, which they can use to present to lenders and financial institutions to find the best loan for you.
If and when a loan broker sees that you are the right candidate for a loan, they will let you know the monetary details and what their commission is for finding the loan for you.
This fee is usually a percentage of the amount of the loan you’re approved for. This can range from 7% to 17% for online loan brokers and 1% to 3% at banks or financial institutions, according to Finder.com.
The fee they charge to help you find a loan is usually included in the price of the loan itself. You can also choose to pay for it right away. At times, some loan brokers only charge you when you successfully secure you a loan, but other loan brokers may still charge you even if you don’t get a business loan.
How to choose a loan broker
If you’re deciding to meet with a loan broker, then a good tip is to meet with several different brokers to see which one is the best fit for you.
In a way, you can look at the process of finding a loan broker much like dating. There are good loan brokers and bad loan brokers, and there are good ones that might not be able to meet your needs, as well as bad brokers that you find appealing.
It’s imperative to hire a good loan broker, as many can hinder your ability to get good loans and might even affect your business.
Therefore, when choosing a business loan broker, there are a few things you should ask for and look out for:
- Choose a loan broker with experience or someone who at least has experience in your industry to some degree.
- Choose a loan broker that wants to help you and seems eager to work with you to find various options.
- Ask what their fees are. Cost should not be the only factor when choosing a loan broker, but it is undoubtedly an important one.
- Choose a loan broker that has good reviews from others who have worked with them or their company. Asking for recommendations would be a great way to start.
- Trust your gut. If you have a bad feeling after meeting with a broker, then wait till you meet with one that has you leaving the office with a positive impression.
Loan broker: pros and cons
Even if you find the right loan broker, it’s essential to consider the pros and cons of working with one altogether. When it comes to financing your business, every decision has to be considered thoroughly.
By looking at the benefits and downsides to hiring a loan broker, you can make a better-informed decision.
Some pros of hiring a loan broker are:
- They’ll save you time. With a business loan broker, you don’t need to sort through all the different loans available on your own. You have someone who knows a lot and can guide you through the process.
- They’ll help you stay organized. When applying for a loan, there’s a lot of paperwork that goes with it, and the loan broker will do this for you and/or point you in the right direction.
- They’ll get you a good deal. Loan brokers, even though they charge a fee, are working for you. Therefore, they will do their best (in most cases) to find you the best deal.
Some cons of hiring a loan broker are:
- There’s a fee! You have to pay them for their time, and sometimes these fees might be too high.
- You have to vet each broker. Choosing the right loan broker can take a lot of time; you need to make sure the broker’s incentives are aligned with your own.
- Risk. A loan broker is working on your behalf, and even though you generally don’t have to worry about a broker finding you a loan, there is a chance that they will hook you up with a loan that’s not feasible for you. This could be a significant problem later on.
- Too many institutions checking your credit score. Some loan brokers send your application to several lenders at the same time. Now, this is not bad in it of itself; after all, you want to know the rates of many lenders to choose the perfect one. The problem is that if all these lenders make a hard pull to check your credit, your score will drop.
Hiring a loan broker vs. applying directly with a lender
As you can see, hiring a business loan broker can be beneficial to not only your business but you as an individual.
That is, of course, if you find the right broker that finds you the right loan.
Now that you have tips at your disposal to help you navigate finding a loan broker, you might be wondering about the alternative—applying directly with a lender.
When applying directly with a lender, you only have the option of choosing from the loans that they have available, which they can offer you. Each lender has their own terms and conditions, and if you are not using a loan broker to compare these terms and conditions to other loan offers, you might be getting a loan that’s not exactly right for you and your business.
That being said—just like finding the right loan broker—if you can find the right lender that’s also willing to help you through the process and explain the details of obtaining a loan from start to finish, you can have a great experience without having to pay the fee of a business loan broker.
Broker or no broker, a loan will help your business grow
Even if you discovered Camino Financial through a loan broker, we are different from other lenders because we never charge the client the broker’s fee. If you get matched with us, we will pay the broker’s fee for you.
And, best of all, the cost of the loan won’t change whether you apply directly through us at Camino Financial or through a broker. To see what we mean, request a quote today!
Whatever direction you choose, we’ll be there to support you, after all, our motto is “No business left behind.”