When seeking financing for a commercial real estate transaction or a business loan, you have the option of dealing directly with a bank, a captive lender, or a full-service loan broker. Banks and captive lenders have limited product options, while full-service loan brokers have access to a large network of lenders. These lenders have multiple products, pricing options, as well as a wider and often more flexible variety of terms.
Whether you need financing for commercial real estate, expansion, equipment, a business acquisition, or working capital, using a full-service loan broker ensures that you will find the right financing for your specific needs. Keep reading to learn four of the most important reasons to use a full-service loan broker.
A commercial loan broker is a borrower-friendly conduit between the borrower and the lender. While a borrower can directly approach a lender, the loan broker knows the ins and outs of the lending industry, as well as the lender preferences, and pricing. With a broker, you get lending expertise along with connections.
A good full-service broker will employ a “consultative approach” to fully understand the credit requirement and all the details and particulars of the financing need, and then search for and source the lender(s) that best fits that need.
Saving You Time
Time is money! For the casual borrower searching for the right lender – it can gobble up lots of it! There are numerous steps to finding the right lender. Basic research on the particular product or financing solution, searching for potential lenders in that space, and then comparing these lenders, and their terms and rates.
Using a loan broker, you can avoid all this. A broker is familiar with the lending landscape and does all of this research for you. They can educate you about potential options and focus on making you successful through their wealth of experience. They will have numerous lenders in their network who they work with and can leverage those relationships to fast track the process and get the loan closed timely (which saves you even more time!)
A broker will package the loan properly to present to lenders. This may be in the form of loan request summaries that detail the loan request in the way lenders like to see them. Many loans are declined because of poor presentation, so using a broker who can do this for you increases the chances of success.
One additional benefit is that once a lender has been selected the broker can streamline the document collection for underwriting. Ensuring the package is complete and accurate and coordinating the process between borrower and lender.
Save You Money
How does a broker save you money? Three distinct ways. First, because brokers are a primary source of loan origination for many lenders, they can often leverage these relationships to obtain preferred pricing. Second, lenders know that brokers will shop the deals for their clients. This means that lenders are more likely to offer their best pricing right away to ensure they are properly considered. Third, brokers are well-versed in the fees and expenses that lenders charge. As a result, brokers can educate the borrower about these fees, as well as how these fees may vary between different lenders and lending products.
Flexible Options
As we’ve discussed, brokers can save you time and money- but they can also save you a lot of headaches. Full-service brokers provide you with a plethora of options. They are familiar with the lenders, products, and nuances of credit preferences and requirements. As a result, they provide a variety of lending options. Brokers can also combine products to provide a customized financing solution. For instance, they may combine a short-term solution to deal with an urgent financing need, and then replace it with a cheaper long-term solution which may take more time to underwrite.
Some lenders work exclusively with brokers and even provide access to some lending options that are not available to the general public. This is because brokers act as a gatekeeper of sorts; they supply the lenders only with qualified borrowers that fit their lending profile and preferences. Save yourself the headache and opt-in to the increased choice and flexibility that a broker can provide.
Educational Advice
Because conventional lenders tend to offer a finite choice of products and solutions, borrowers may ultimately select a product that doesn’t fully fit their needs. Brokers, on the other hand, have a wide array of lending options at their disposal. They can also explain the various terms such as prepayment penalties, lender points, closing costs, speed to close, loan to value, debt service coverage, and other commercial financing terms.
In this way, well-educated brokers can direct a borrower towards an informed decision that’s in the best interest of the borrower. They are there to cater to borrower needs, not to sell or push a particular lender or loan product.
Consider the Following Example…
You’re in the process of buying a car at a dealership. Which option would you choose?
1. Your local Ford dealership with every Ford make and model, brand-new and used. Sales agents who are only familiar with only Ford vehicles.
OR
2. Your local auto-dealer with many vehicle options, including Ford, Chevrolet, Jeep, Toyota, Honda, and many others. These agents are familiar with every make and model they sell, across all of their brands.
If you want the most options, with the least amount of bias you would probably choose option 2.< This also applies when working with an experienced commercial loan broker for your business financing needs. Full-service commercial loan brokers can save time, money and offer the borrower more choice and flexibility, as well as knowledge. This adds a lot of value to the process. Martin Cobb is the Founder and Senior Funding Officer at Churchill Commercial Funding. The company specializes in alternate financing solutions for business owners and real estate investors. They will provide you with a quote for funding terms within 48 hours. Visit our website to learn more about how we can help you with your business.
Churchill Commercial Funding is proudly located in Southeast Michigan while serving clients nationwide.
(734) 368-1339
mcobb@churchillcf.com
