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Sep 06, 2020 03:49 PM EDT

How to Become a Commercial Loan Broker

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Commerical loan Officer

(Photo : depositphotos)

Commercial loan brokers help businesses to find and secure financing to boost their operations. Loan brokering is an exciting career, as it swings open opportunities to make money and help business owners achieve their goals.

Since it’s a growing industry, you’ll have a chance to develop your commercial brokerage company. Commercial lending has risen tremendously since the 2008 housing crash, and although entrepreneurs can seek funding from credit unions and banks, these loans come with structured payment and high-interest rates. As a commercial loan broker, you can present business owners with many affordable funding options.

Get trained

Before you seek employment or open your own brokerage agency, you’ll need to undergo the necessary training. Although commercial brokers don’t necessarily require any higher education or specialized degrees, it’s vital to have a robust understanding of accounting, finance, and the markets. The knowledge acquired from the course will form the foundation for starting and growing your career or business, so make sure you pick a program that will offer all the skills you need.

Make sure the money and time you invest in your education counts. The training involves various classes on subject matter such as commercial lending basics, equipment loans, construction loans, business factoring, real estate loans, and hard money loans. Besides attending classes, take time to learn by yourself. It helps to understand popular loan software platforms like LoanPro to ensure that you can create and present completed client files to lenders.

Understand the licensing requirements

In several states, It’s not mandatory to acquire a license to become a commercial loan broker. However, in the case of real estate loans, you’ll need to be licensed. As a first step, you’ll need to determine if you require a license before launching your career as a commercial loan broker to ensure you comply with your local laws. Therefore, research, investigate, and contact the states' licensing board. Although particular states require licenses for mortgage brokers, "mortgage" is defined in a limited manner to only apply to non-commercial real-estate.

As an additional precaution, you can also consult the banking industry members or your small business administration’s local branch. About 20 states mandate specific licenses, so do your due diligence instead of making assumptions. If you neglect this research, you could suffer criminal or financial penalties for operating without a license. Once you undergo a criminal background examination and fingerprints processing, these costs will fall on your shoulders. With the sanctity of your record at risk, it would be better to acquire your necessary licenses before facing a potential arrest.

Acquire work experience

Learning the position’s ins and outs from an established professional allows you access to insider knowledge of the industry, builds confidence, and gives you transferable skills like teamwork and communication. Ultimately, this mentorship will prepare you to handle the rest of your career so that you can soar with flying colors. Working in a financial institution is the most straightforward way to acquire this loan industry knowledge.

You can also search for employment in a commercial loan brokerage or with lenders and companies that employ in-house loan brokers. Remember to groom and dress professionally for interviews, as the financial industry is rather conservative and expects its applicants to adhere to a particular style guide.

Structure your commissions

You earn a commission, aka a percentage of the brokered loan total value, only when a lender agrees to a loan proposal. Although the fees typically fall between 0.5- 4 percent, they can go as high as 10%, and as the loan’s value increases, the fee’s percentage drops. Several brokers have application fees that usually range between 1000 to 2000 dollars.

Depending on the written agreement, lenders or borrowers can pay these fees. Just make sure you indicate the fee structure clearly on your broker contract.

Grow your network

Before you go out to network with potential clients, build relationships with lenders like private lenders, credit unions, and banks. Doing so ensures that you have potential lenders at your disposal when required. Take time to establish and nourish these relationships and continue to expand your network, informing loan officers that you will strive to find ideal borrowers.

Identifying the specific types of ideal borrowers for each lender will make your workload much easier to accomplish and increase your chances of satisfying your clientele. Networking is also an excellent way to market yourself as a commercial loan broker. Therefore, attend industry parties and conventions, leave your marketing materials and business cards with various companies, join civic organizations to meet industry leaders like CEOs of major companies, make cold calls, and contact potential borrowers regularly.

In summary

Like any other career, you’ll need to gradually develop your reputation as a commercial loan broker to these industry leaders. Clients expect that you are an expert on lending development and regulations, so make sure to stay informed on any new industry developments.

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