Finding the best small business loans can be difficult. There are so many lenders that analyzing and comparing all the options is practically impossible. In addition to their money, the time of business owners is one of the most valuable resources they have.
This is why many consider hiring help to save time and money.
So, if you think it’s time to start growing your business, but you need financing, and you don’t have time to ask multiple lenders questions, you may consider working with a loan broker.
Loan brokers are great options for entrepreneurs who are short on time and need assistance in finding the best financing. Not only can they help you find great loans, but they can also help you save your time so that you use the time on what matters: your business.
If you find the loan broker appropriate , it will save you time, energy and stress.
But first, who is a loan broker?
Most business owners do not have time to search for loans. They need to focus their time on running their own businesses efficiently. But financing is very important. Many entrepreneurs find themselves faced with this dilemma.
A loan broker is a person who can help you find a loan (or any type of financing) for your business to grow. They have accumulated years of experience, connections and have a great network of contacts in the industry. A good loan broker can find you the perfect loan.
While you focus on your business, they focus on finding you the best loan possible.
Loan brokers arguably work as intermediaries between banks or lenders and borrowers..
Okay, how then do the loan brokers work?
Before submitting your loan application, brokers may ask you to submit certain documents.
For example, if you are looking to obtain a loan for your business, a loan broker may request a business plan along with other requirements that demonstrate how you will use the loan and how you will repay it. They also make sure that all the information you give them is accurate and honest.
After this, the loan broker will usually write a profile about you or your business (or both). This profile will show how good an applicant you are, and then they will present it to lenders and financial institutions to find the best loan.
If a loan broker sees that you are a good candidate for a loan, they will inform you of the monetary details and what is the commission they charge to find your loan.
This fee is generally a percentage of the loan amount for which you are approved. It can range from 7% to 17% for online loan brokers and 1% to 3% at banks or financial institutions, according to industry experts.
The fee they charge to help you find a loan is usually included in the price of the loan. You can also choose to pay it immediately. Sometimes, some loan brokers will only charge you when you successfully obtain your loan, but others may charge you even if you don’t get a business loan (so make sure you find the right broker).
Ok, how can one choose a loan broker?
If you decide to hire a loan broker, then it is good advice to meet with several different brokers to see which one is the most suitable for you.
In a way, you can compare the process of finding a loan broker to dating. There are good loan brokers and bad loan brokers, and there are good brokers that may not be what you need, as well as bad brokers that you find attractive.
It is extremely important to hire a good loan broker, as many can damage your ability to get good loans or even damage your business.
Therefore, when choosing a business loan broker, there are a few things to keep in mind:
- Choose a loan broker who is experienced in your industry to some degree.
- Choose a loan broker who wants to help you and is willing to work with you to find several options.
- Ask what their rates are. Cost shouldn’t be the only factor when choosing a loan broker, but it certainly is important.
- Choose a loan broker who has good reviews from their clients. Asking for recommendations is a great way to start.
- Trust your instincts. If you have a bad feeling after meeting with a broker, wait until you find one that gives you a positive feeling.
Loan broker: advantages and disadvantages
Even if you find the right loan broker, it’s important to weigh the pros and cons of working with one. When it comes to financing your business, every decision is vital.
Some advantages of hiring a loan broker:
- It will save you time: With a loan broker, you don’t need to search, sort, and analyze all the different loans available, you have someone who knows a lot and can guide you through the process.
- It will help you stay organized: When applying for a loan, you have to do a lot of paperwork. A loan broker will either do this for you or guide you in the right direction.
- It will get you a good loan: Loan brokers, even though they charge a fee, work to help you. Therefore, they will do their best (in most cases) to find the best loan for you.
Some disadvantages of hiring a loan broker:
- Service fee: They charge a fee, so you have to pay them for their time and sometimes these fees can be too high.
- You have to veto every broker: Choosing the right loan broker can be time consuming, you need to make sure that the broker’s incentives are aligned with yours.
- There are risks: There is always the possibility that a bad broker will connect you with a loan that is not feasible for your business. This could become a major problem later, and you could end up in debt.
- Too many institutions will check your credit score: Some loan brokers will send your application to multiple lenders at the same time. This is not a bad thing in itself, after all, you need to know the rates of various lenders to choose the right one. The problem is, if all of these lenders check your credit with a ” hard pull, ” your score will drop significantly.
Hire a loan broker or do it yourself: Which is better?
As you can see, hiring a business loan broker can be beneficial for your business, although if it is not chosen well, it can mean more problems than advantages.
Now that you know how to find a loan broker and the pros and cons, you may be wondering whether to hire one or do the loan search yourself.
Looking at the complexity of getting a loan broker for the appropriate loan for your business, have you ever considered speaking with a loan facilitator that will connect you with the right broker and help you cut the nice deal you want?
Yes, there are loan facilitators that will enhance you by getting the right broker that will understand your business and get you the perfect lender for your desired loan. Fincue is a loan facilitator. We are an Australian-based loan facilitating expert that will connect you with the suitable loan broker. Speak with us today.