A business loan broker specializes in connecting businesses with third party lenders and investors to secure loans for their business’s needs. An alternate name for a business loan broker is Commercial loan broker.
A business loan broker is someone that acts as a connector between a business seeking financing and a lender. Commercial loan broker can save you time by identifying the best loans for your business’s needs. They can also help you to navigate the often-complicated process of identifying eligibility and applying for financing.
Due to the fact that loans can be highly specific, there are various types of loan brokers who specialized in different commercial loans. Finding the right broker can be as important as selecting the right loan for your business.
How Business Loan Brokers Work
When it comes time for a small business to grow or access the capital to purchase equipment, for example, there are many avenues to secure funding. Identifying and vetting each lender and loan to find the right fit for the terms and eligibility, however, this can be time consuming. Rather than going through banks or going from lender to lender and assessing each loans pros and cons, you may opt to use a loan broker.
A broker can assess your company’s financial goals and streamline the loan process by pairing your business with the most appropriate lenders.
A good commercial loan broker can save you time and effort by using their vast network to aggregate specific products and partners that are the right fit for your business. Loan brokers may even be able to:
Leverage their connections to find you lower interest rates
Negotiate terms on behalf of your business
Expedite the underwriting process so you can gain quicker access to funds than you would on your own.
*Business loan brokers charge a fee for their service, which can range from 1%-17% of the loan amount.
This may be charged to the lender or the borrower, so it’s important to understand the fee structure and how it affects you. Doing so will help you evaluate if the time saved is worth the cost.
Types of Business Loan Brokers
There are several kinds of funding available for business, and commercial loan brokers often specializes in some specific types of financing. Business owners must understand the type financing they are looking for and identify a commercial loan broker with a network to service their needs most effectively. Some specific types of loan brokers are outlined below:
SBA Loan Broker:
Brokers specializing in Small Business Administration (SBA) loans can connect new and existing small businesses with loans provided by banks, community lenders, and credit unions. Some businesses may find it easier to secure these types of funds over others since the lender’s risk is minimized due to the SBA guaranteeing the loan. SBA brokers can help small businesses navigate this process with a third-party lender, identify which SBA loan may be right for them, and help expedite the process as much as possible.
Conventional Commercial Loan Broker:
The most generalized type of loan broker, a basic commercial loan broker, typically maintains strong relationships with major banks and credit unions. They also possess extensive knowledge of their respective loans and line-of-credit products. A commercial loan broker can help you sort through the financial details to find a loan that’s right for you.
Small businesses looking to purchase machinery to grow their business may look to equipment financing brokers. Depending on your credit score, your business track record, and your sales projections, brokers may connect your business to financiers who can help fund large equipment purchases.
Others include: Franchise Broker, Merchant Cash Advance Broker.