How to Become Broker for Commercial Loan
5 stars based on
Mortgage brokers can help small businesses grow with long-term, low-interest programs. Entrepreneurs and small businesses are a vital part of the U.
Why should commercial mortgage brokers care? Because SBA loans provide a unique opportunity for brokers to expand their offerings beyond conventional mortgage loans. With an SBA loan option for their clients, mortgage brokers can offer businesses access to the same type of long-term, fixed-rate financing enjoyed by larger companies.
Interest rates become a small business loan broker equivalent to favorable bond-market rates and are backed by an SBA loan guarantee. Each SBA loan program is structured under government-directed guidelines to include maximum loan amounts and interest rates, guarantee fees, use of proceeds, eligibility criteria and more.
Matching clients to the right program requires a deep understanding of these intricacies. Plus, SBA requirements are constantly changing.
Brokers need to be plugged in to keep up, so the support of a team of SBA loan specialists is a critical first stage of client engagement. SBA loans are long-term, low-interest loans tailored to small businesses, the definitions of which vary widely among industries. Small-business loans also are backed by a government guarantee, alleviating risk for lenders and opening doors to financing for businesses that have struggled to get a traditional loan.
SBA loan programs have capped interest rates and offer lower downpayments, making upfront costs more affordable. They also feature longer repayment terms, which reduces monthly payments. Soft costs like become a small business loan broker and legal fees also can be rolled into the loan.
Downpayments as low as become a small business loan broker percent are a big attraction of this program, because banks often require 20 to 30 percent of the purchase price. That downpayment is based on total project costs in most cases, which includes renovations and soft costs. That allows a business to preserve cash for working capital.
Advantages for mortgage lenders include lower risk, because the SBA guarantees the loan; a lower loan-to-value LTV ratio; Community Reinvestment Act credits; and being able to offer another option for keeping growing, small-business clients happy. Essentially, SBA loans offer a valuable financing option that enables brokers to expand offerings to eligible businesses become a small business loan broker their current purview by teaming with an SBA lending partner.
PLP status is the most desirable accreditation that an institution can receive because it gives the lender the authority to make the final credit decision, simplifying and expediting the loan-approval process for all parties. Nonpreferred lenders must submit loans to the SBA for approval, a process that can take several weeks, delaying approvals and yields.
SBA loans are a valuable resource for commercial mortgage brokers seeking to expand their base, reduce risk and offer clients alternatives to conventional mortgages. But to participate fully and successfully, brokers must understand the market well and partner with an accredited SBA loan expert. Achieving PLP status requires lenders to have in-house staff expertise and a track record of success in the processing and servicing of SBA loans.
SBA loans offer many unique opportunities for lenders and brokers alike, but can be complex, and require significant resources and expertise.
Even with the right SBA partner, there are several proactive steps that mortgage brokers can take to ensure a winning SBA loan application and bring additional value to their client relationships. Appraisals can trip up any real estate deal. With construction costs rising each year and the potential for material costs to change during the approval process, financial projections can easily go awry. Another surprise that can ruin any deal is an environmental issue, such as mold, radon or other land contaminants, as well as a failure to comply with applicable environmental laws.
Rather than increase their debt or hurt their chances of being approved for a loan, become knowledgeable about how SBA refinancing options can consolidate existing debt. Work with your client to understand their debt and how they can save money through refinancing. Partnering with an SBA lender is an essential step in not only ensuring your become a small business loan broker are matched with the right loan, but that the loan has the best chance of being approved by the SBA and serviced in accordance with SBA requirements.
Sending along a loan referral also can pay dividends in terms of your client relationship and the added bonus of a nice referral fee.
He has more than 10 years of experience in the banking and lending industries. He is dedicated to helping growing businesses and providing assistance to navigate the SBA loan process. Reach Pierson at or spierson firstbanksba. Enter your e-mail address and password below.
The text exceeds the maximum number of characters allowed. Are you become a small business loan broker you want to permanently delete this blog comment?
This action cannot be reversed. You must enable your community profile to use this feature. You have flagged this post for inappropriate content. Inappropriate Offensive content Copyright violation. Scotsman Guide Media P. What are SBA loans? Key Points Questions to ask before expanding into SBA loan programs SBA loans are a valuable resource for commercial mortgage brokers seeking to expand their base, reduce risk and offer clients alternatives to conventional mortgages.
Does your brokerage have a full understanding of the intricacies of the SBA lending market, so you can determine which loan will work best for your borrowers? Is your team familiar with the become a small business loan broker of the SBA loan-application process and the precise requirements become a small business loan broker to ensure become a small business loan broker successful application?
Could you act as an effective middleman to guide and inform your clients as they proceed through the underwriting and post-closing reviews? Do your referral options include SBA-accredited banks that have the skills and expert staff to service and report on these loans in accordance with SBA guidelines reporting? Does your lending partner have sufficient back-office capacity and know-how to support SBA lending requirements? Lender Search Residential Commercial.