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How to Choose a Business Loan Broker?

sme loan broker

With so many business loan brokers around, how do you differentiate the good brokers from the bad ones?


For anyone who has been through the hassle of getting funding for your business — they would know that it can be a very difficult and tedious process. It entails using precious time to research on the rates and products available, to analyse and determine the needs of your business, to pick a trustworthy lender, to bargain and negotiate for the best possible deals, to study through and understand the terms and conditions of the loan etc. Just to name a few.

As such, in light of a busy schedule, or simply having better things to do, why not get someone to do it for you?

In this article, let us find out a little more about the role of business loan brokers. As a simple description of the job, business loan brokers essentially help businesses to facilitate and connect with the most appropriate business lenders. However, it can get a little more exciting and complex than that. There exists a class of business loan brokers who come with more knowledge, a deeper understanding of corporate financing, and with a more extensive network of connections. This rare group of brokers are hard to come by, but when they do, they come with fire and brimstone. They are able to breakdown and understand deeply the structure and operations of businesses. Having done so, they then proceed to strategize, structure, and syndicate the most appropriate financing for your business. While the average broker isolates himself to the facilitation of business loans or anything that is convenient and fast, the rare business loan broker structures equity financing, unsecured bonds, convertible loans, trade financing, unsecured business loans or whatever is ideal and possible, all with the focus of helping their clients to get the financing they need. Therefore, if you think about it, hiring a loan broker could actually help you to save time, money, and energy.

Here we will look further into why some business owners trust business loan brokers with getting their business loans—and what you should do to gauge the efficiency and effectiveness of the broker. After all, there are many brokers who are just out to earn a quick dollar, without actually adding any value, and without any real interest in helping businesses to raise capital.

Reasons for Hiring a Business Loan Broker

To delve deeper into the topic, let us explore the actual value-add that brokers can bring to the table, other than the general savings of time, energy and money. Similar to using the services of travel agents and property agents, we cannot deny that more often than not, they are able to make life a lot more convenient for us.

Here is a list of very specific benefits that a business loan broker can provide:

  • You get the best possible deals in town – While it can take us weeks or even months to approach every financier to hunt for the best deals, an effective broker will know exactly what each lender is offering and where the best deals can be found at any given point in time. As such, you get to save and conserve on the most precious and priceless commodity – time.
  • More solutions and choices to choose from – Ever been in a situation where your loan applications were denied by practically every bank you approached? Did you feel like you had no other avenues to get financing from? That’s right. That is precisely where the role of a business loan broker fits in. With a wider network of alternative financiers in their reach, they are able to effortlessly lead you to many other potential alternative lenders who may be able to fund your business, even if you were rejected by every bank in the city.
  • You get to focus on actually running your business – In addition to the savings of time and energy, you also get to unburden yourself and let go of a big chunk of worry. Especially when we know that the process of getting a business loan can be very tedious, it can take up a significant portion of your concentration and focus. Therefore, with help of a business loans broker, it will help you to maintain greater focus on operating your business, which translates into more efficiency, and ultimately, more profits. So focus on generating more profits, while you let a broker do what he does best.
  • Experience and network – The nature of a broker’s role has it that successful deals are heavily reliant on relationships. To build relationships, you need to establish network. Therefore, people who thrive effortlessly as a broker are almost always a people’s person, which helps when in the process of networking and meeting the right people. Having a wide network and knowing the right people could also translate into being able to secure deals that others are unable to.
  • Greater knowledge – The epitome of a broker’s value-add can be showcased in 2 situations – a) when a business is unable to obtain any financing from the banks or financial institutions, but the broker steps in and manages to get the funding that the business owner needs, and b) when a business is only able to get a certain amount, but a broker is able to qualify the same business for a much higher amount.

Questions to Ask Before You Hire a Broker

While there are many benefits to hiring a broker, it stands true that there will always be two sides to a coin. With no regulations to govern the business loans brokerage industry, many brokers have turned to dishonest tactics to get an edge, and when something goes wrong, consequences fall largely on either the lender or the borrower.

However, while it is good to be aware of the potential pitfalls of hiring a crooked and untrustworthy broker, we must also remember that there are still many upright, skilful and effective brokers around who genuinely do take interest in helping your business to get the financing it needs. In any case, it is good to be prudent when making a decision to hire a business loans broker, and we can do so by asking the following questions:

  1. Inclusive of the broker’s fees, what would be your total cost of financing?
  2. Is the interest rate of your approved business loan in-line with the market average?
  3. To which lenders are your documents and information being share with?
  4. What are the consequences of a late payment, a missed payment, and even a default?
  5. What are the risks of taking up the loan?
  6. Will my information be kept strictly confidential?
  7. Are the loan offers brought to you by the broker really the best deals in town?

Be Alert! Always protect the interest of your business.

In conclusion, it is wise to always be cautious and skeptical. When considering a working partnership with a business loans broker, always keep an eye out for the following tell-tale signs. At any moment that you realise something is amiss, do not hesitate to run basic checks by searching for reviews on the internet, or by asking questions. By asking the right questions, you will often be able to filter and separate away the shady brokers from the genuine ones who sincerely take pride and interest in wanting to help you and your company to raise funds. 

The tell-tales signs are:

  1. No company registration records
  2. Negative online reviews
  3. No trace of online presence, or references to the brokerage
  4. No transparency with fee structure
  5. No privacy policy

Always remember that the eventual outcome of a genuine broker, who helps you to get the funds YOU need, as compared to the outcome of an uninterested broker, who helps you to get ANY funds that are most convenient, can be vastly different. Therefore, if you need to hire a business loan broker, understand that taking the effort to carry out basic due diligence and simple research could save you from a whole world of problems. In fact, it could even lead you to a good and trustworthy broker, who has the knowledge and skills to get the financing your business needs in order to breakthrough to the next level of success and growth.


Which points did you agree with? Any other points that you would like to add? Please add them to the comments box below!

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