Use our guide to help you get the best out of a business loan broker.
If you are struggling to run your business while trying to find external funding, a business loan broker could be something to consider. Choosing the right loan for your business can be an overwhelming task, so by delegating this to a broker you can turn your attention to running your business.
What will a business loan broker do?
More than just a timesaver, a good loan broker will be able to communicate with a wealth of lenders, drawing on their experience to negotiate the best deal for your company. By carrying out extensive research, a broker can get a detailed understanding of the kind of loan that will suit your business and the terms that will help you achieve your goals.
How much does using a business loan broker cost?
Rather than you paying the broker a fee, most business loan brokers are funded by the lender as the loan is repaid. Often this will be a figure between 1% and 3% of the total loan amount, but it can be higher. Make sure you are aware of the full brokerage costs before you agree to sign on to a broker’s services.
What you should look out for with a business loan broker
A business loan broker is there to help take some of the pressure off you and to assist in making an important decision that should ultimately save your company money. Keep an eye out for any of the following signs when choosing a broker or working with one.
- Additional fees. The broker will be paid by whoever supplies your loan so they should not be charging you additional fees. If you are being hounded for upfront payments and commissions, it might be time to find a new broker.
- Difficult to contact. A broker should have at least one free-to-call phone number. Toll-lines and rarely-checked email inboxes can cost you time and money.
- No experience. The best business loan brokers have knowledge and industry experience built from years of finding loans for their clients. At least some of this will be documented online, so be sure to check before you engage their services.
- Bad credit marketing. Promises of guaranteed loans can be appealing, but be wary of brokers who disregard credit scores. You could end up paying exorbitant interest rates on a loan that was found quickly with little thought for the needs of your company.
- No references. A quality business loan broker should be able to give you the details of previous customers who can offer you insight into their experiences. Working with a company that has zero testimonials is always a risk.
How can I make sure I get the best service possible?
The key to successfully utilising a business loan broker is to provide as much information as possible about your company. Cash flow projections, company history and aims for the loan can all help a broker guide your business into the right loan and make sure you come out stronger on the other side.
Online business loan brokers
If contacting a physical broker doesn’t appeal to you, the other option is an online service. These websites bring several lenders together in one place, allowing you to compare them and easily contact the ones that best suit your business. This can be extremely efficient, though some business owners may prefer the benefits of communicating with an expert broker in person.
Before deciding on a business loan broker, take the time to consider your options and find the person who best fits your needs.