- A Business Loan Broker is an important professional for companies and organizations that are looking at financing options.
- They act as an arbiter between business and lending institutions and find ways and means to get the best possible financing options.
- Post the COVID-19 Pandemic, the role of Business Loan Brokers has grown as companies are either looking at sustaining themselves or aiming for expansion.
Any business that wants to raise funds for itself might find it hard to connect directly with a bank. This is truer for SMEs and MSMEs that might not have the time, expertise, or manpower to present documents, argue cases, and showcase projections.
If you have been in business for any length of time, chances are that you might have encountered Business Loan Brokers. In recent years, loan brokers have stepped in to help businesses in multiple ways.
In this resource article, we are going to look at the major opportunities that exist as a business loan broker. We are also going to shed some light on why this profession has become an attractive proposition for professionals looking to quit their 9-5 jobs and venture into service entrepreneurship.
Table of Contents
Business Loan Brokers: What do you need to know about the industry?
In order to understand the profession, we must try to understand what happened to the job market in the aftermath of the pandemic. Millions of professionals were laid off in industries across business niches. These were qualified, experienced, and hard-working professionals that found themselves without a job.
A new opportunity stared these corporate professionals in the face. The opportunity allowed them to put their years of experience in finance, networking, and connections to good use. Business Loan Broking as a profession thrived in the aftermath of the pandemic.
A Business Loan Broker’s job consists of using his or her networking, finance, and investment skills to help SMEs and MSMEs secure working capital and equipment financing for a suction device. They work with traditional lenders like established banks as well as alternative lending institutions in the semi-formal space.
The COVID-19 pandemic resulted in millions of businesses requiring funds to stay afloat or plan expansion strategies. In both cases, they required funds, which big banks were hesitant to roll out. Business loan brokers stepped in and tied up with alternative financial institutions to help such businesses with capital.
Reasons for the Growth of Business Loan Brokers in the Post-Pandemic Period
In this section, we are going to highlight three critical reasons that have made the profession of business loan brokers flourish-
- Stricter Lending Policies of the Established Banks-
Most established banking institutions in the post-COVID-19 era wanted to protect their risk exposure as much as possible.
They did not want to extend loans to SMEs or MSMEs who did not have a spotless financial record. The aversion to risk meant that such businesses faced a closed door when they approached traditional banks for business loans.
With these businesses in dire need of raising capital either to sustain themselves or plan growth strategies, business loan brokers emerged as a credible alternative.
- Emergency Need for Funds for SMEs and MSMEs-
For businesses, the pandemic either resulted in questioning the very survival of their business or presented them with an opportunity that they could leverage.
Most businesses that were hard hit, required funds just to get them over the tough periods, as they knew that once things opened up, it would all be about resuming normal operations.
Other businesses saw an opportunity in the crisis and wanted to scale up production or start new product/service lines that could help them scale profits and register growth. In both cases, required immediate financing help that could help them fulfill either of their needs.
- Demand for Professionals who could handle Documentations and Relationships-
For a small business owner, devoting every passing second to chase down banks and lenders is an impossible task. They have so much to do, including looking after the production process.
Securing a business loan requires tons of paperwork, clearances, compliances, and presentations. A small business owner does not have the time, expertise, or resources to manage these things on his own.
This is where business loan brokers came to the rescue of such businesses. Given their strong corporate backgrounds, they were able to get the paperwork done in minutes.
Do you need a License to Become a Business Loan Broker?
If you are someone that is looking to start a business loan broker business, you do not need any kind of a license. Some states only require you to get a license if you are looking to become a broker and help with real estate loans.
- While many states do not have any license requirement, it is always a good idea to check with the local Licensing Board in your state. You can also find out about the same by speaking to someone who is working at a bank or a government body that provides business certificates.
- Not only do you not need a license, but you also do not need any huge start-up investment costs to start your business loan broker firm. You can work on your own terms, be a one-man show or hire other individuals to help you. In other words, you can be your boss at all times.
- Successful loan brokers earn upwards of six-figure salaries and can enjoy working on their own terms. This means you do not have to sacrifice your family or personal time and keep working just to fend for yourself. The commissions, connections, and networking pay handsomely.
Is the Business Loan Broker Industry expected to grow in the next few years?
The correct answer to the above question is a resounding YES!
With traditional lenders still wary of associating with SMEs and MSMEs, the job of a business loan broker is only going to rise in the next few years. You need to understand that banks, even if they would be willing to lend, will not do so unless you are offering heavy securities.
This is a requirement that a majority of SMEs and MSMEs will not be able to fulfill. The immediacy of securing cash infusion into such businesses is definite and pronounced. You need cash within a month, or you can say goodbye to your business.
Businesses that are faced with such situations do not mind paying additional interest rates or commissions to alternative lenders or brokers. They know that once they can use the finds in the right way, all these overhead costs will not amount to anything.
The Bottom Line
If you are looking to make a career transition you should explore the dynamic and fast-growing role of a business loan broker. With economies slowly opening up, millions of small and medium businesses will require a lot of funds to script the next step of their stories.
With banks still hesitant to help these entities out, a business loan broker remains the only viable and credible alternative for these businesses to raise capital. If you have any other questions regarding any of the points mentioned in the article, please let us know in the comments section below.