Commercial Loan Broker in a Box

In this lesson I introduce you a little bit to me and share my experience.

Don't rush out and form an LLC or some other legal entity. Listen to this before you do that.

Here's the deal. Some states require licenses and some don't. I can't keep up with them all. So, be sure you call your local government and find out before you get yourself in trouble.

These are the deals I would focus on if I were starting a commercial loan broker business all over again.

You will need lenders that are willing to look at your loans. Here is how you can build out your network.

Start with this template, and then customize the message, when creating an introductory email for reaching out to lenders you want to add to your network.

There are many online lending marketplace that you can send deals to if they fit that marketplace's appetite.

I've built a list of over 50 lenders including the types of loans they are looking for and for some their contact information that you can leverage to establish your own lender network. See attached resource file.

Here are some ways that I would market my business and one way you might want to avoid because of its cost.

I love having deals come to me through referrals. Here are the types of professionals I suggest you build relationships with in the hopes that they will send you deals.

Use this template for emailing potential referral partners. I've used this exact approach before and had a 10% success rate (which is 5x that of normal email success rates).

I created this copy for you to use on your website if you are trying to capture leads from prospects that visit your site. You will want to customize it to your personal experience. For example, you could leave the piece in about "my network has..." because the way I see it, as my student, you are in my network and I've done that many deals and will be willing to support you in the deals you do.

I created this template for you to use in email potential borrowers.

This three email sequence works well for people who are willing to register for more information after visiting your website.

You will need a referral agreement between you and your borrower to make the relationship legally binding and to ensure you get paid.

***Talk to your own attorney first before you use any part of this template***. That said, attached is a sample of the fee agreement I use with borrowers.

I don't just broker commercial loans. That's because over the years I have learned that my customers have other needs I can help with. Here are some of the other services I recommend offering.

This course was created with beginners in mind. So, I only cover the basics. The good news is that those basics makeup the majority of things you will run into. The rest are "edge cases" and are deals for more sophisticated organizations.

By the way, you might notice that some of the lessons speak as if you are the borrower. That's because they were recorded to work with  my other course, The Business Loan Formula which is for borrowers themselves, and this course.

Either way, the material is the same. If you are a broker you are working on behalf of the borrower!

Part of your value as a commercial loan broker is understanding what lenders look for in a loan in the first place. Here's my take.

Here are some of the common acronyms and terms the industry uses.

Do not send every loan you get to every lender you know! I call this shotgunning and it will ruin your reputation as a broker.

The only way to know if a borrower has a chance of getting approved is by asking the right questions early on. Here are some of my favorite pre-screening questions.

As a commercial lender the first question I asked borrower was, "What is the purpose of the loan?. Or, more simply, what do they need the money for? This helps me understand their financial position (if they need it to make payroll they could be in trouble) and what types of loans are best for their situation.

Every single lender has certain types of loans they like to make and loans that they don't like to make. You need to understand their appetites to avoid wasting your and their time with loans they aren't interested in.

Loans pass through many phases. From origination, to underwriting, to closing (hopefully!). Understanding the workflow will help you get your borrower updated on where things stand.

A good commercial loan broker knows that a smooth handoff between you and the lender(s) you are taking a deal to is critical to its success. This lesson talks about the documents that do into a loan package.

The attached document is a sample loan checklist that I send to all of my new clients. That way I have all the documents I need in order to approach a lender.

In this lesson I talk about the two, yes, two, types of credit that the lender will look at for each borrower involved.

Getting a business loan approved is all about proving the ability to repay. Lenders look for multiple sources of repayment. Here is what that means and what the sources usually are.

SBA loans are a great way to help borrowers that aren't quite ready for a normal business loan to get the capital they need. As the former head of the top SBA lender in my state, I walk you through how SBA loans work.

There are three main factors that make up about 80% of either business loan approval. This lesson teaches you what they are and then, in later lessons, we talk more about how to analyze them.

Get a pen ready! This lesson teaches you how to calculate debt service coverage ratios so that when you take a deal to a lender you can tell them that the primary source of repayment is covered!

When calculating debt-service coverage ration there are a few things you can add-back into the equation that will favor the borrower.

Collateral is always the secondary source of repayment. In this lesson I teach you some of the typical LTVs you can expect lenders will to give on each type of collateral.

This lessons talks about the differences between secured and unsecured loans.

With real estate loans there are two main types. Owner occupied, where the owner's business takes up 51% of the space, and non-owner occupied where more than 51% is leased out to other businesses. This will change the loan-to-value the lender is willing to give you on the deal.

The second most important piece of a loan approval is that the borrower can demonstrate enough liquidity (or cash) to cover their injection into the loan and have enough left over for emergencies.

Will you borrower have to sign a personal guarantee? Here is the answer to that question and how you should respond.

Good lenders use global underwriting practices. Meaning that they don't decline loans because of one negative aspect when there are lots of good factors.

Lenders assign risk grades to many of their loans. What does that mean and how does it affect your borrower?

There are two factors of time associated with every loan. The length of time that the loan rate is locked in and the length of time the borrower has until the entire loan has to be paid back. Which one determines the size of the payment? :]

One of the first questions you will get from a borrower is what their rate will be. Here is how you answer that question.

I recorded an update to help you understand all the factors that go into determining an applicant's rate.

Want to get your client a discount on their loan rate? Here is how you do that.

Depending on the size of the loan and the collateral involved, getting a loan from the start to finish can take some time. Here is how long to expect depending on the loan type.

Did you know that loan rates can have floors and ceilings? One favors the borrower and the other favors the lender.

Lenders will give out two types of offers when they are working on a loan. One merely gives the borrower an idea of what the loan structure, rate, etc. might look like. The other means the loan is approved, pending any issues.

Be careful! Some lenders will add prepayment penalties to your borrower's loan and that is something you want to avoid.

Some loans have restrictions but on them by the lender. The most common is regular financial review, usually annually. Others are tougher for a borrower to live up to.

Your fee isn't the only cost a borrower should anticipate. Here is what a loan might cost the borrower in terms of closing costs.

I work with a lot of startups through my business. Particularly in helping them land investors. But can you help startups get commercial loans?

As a commercial loan broker you don't get paid until a deal closes. If you are doing things right you should expect to get about half of your loans approved and close on the other half.

No one wants their client to get declined. But it happens. Here is what you should do next if you are trying to be helpful to those clients.