Let’s cut to the chase. There is a major misconception about loan brokers. The misconception is that going through a loan broker versus going directly to a lender adds no value and costs you more time and more money. That is what most people think. But it is simply not true. In fact, it is just the opposite. Loan brokers add value and offer the best rates and terms. How can that be you are thinking.

Professional loan brokers have a network of lenders they work with. Direct lenders typically have a limited amount of loan products, and one size doesn’t fit all. They can only offer what they have to offer. If you don’t fit their criteria, you won’t be funded. Go to your bank and see for yourself. They are limited in what they can do. And frankly, at the bank, your loan officers are typically young, unexperienced, and change often. In banks, it is the underwriting team with the experience and all the answers. Not the loan officers.

A professional loan broker works with many different types of lenders, both traditional lenders like banks and with alternative lenders. The broker takes you to the lender that will be able to fund you with your specific loan criteria.

Why is There This Misconception?

Simply put, it is the difference between working with a professional relationship type loan broker and an unprofessional transactional type of loan broker who gives the industry a bad name.

Unprofessional transactional loan brokers are taking you to a lender that they make the most commissions from. They want to make the absolute most money they can off your loan. Often, they do not have a solid relationship with the lender they refer you to. They send in just a few proposals a year.

You can tell when you are working with them because they have very few answers to your questions. You can also recognize these types as they usually charge you upfront fees. In fact, they make their living off the upfront fees, not on closing the borrowers’ loans.

Professional loan brokers are relationship driven. They have great relationships with their lenders. They want to establish a relationship with the borrower. They want you to be a client that keeps coming back to them for working capital throughout the lifespan of your business.

Professional loan brokers usually do not charge upfront fees. In most cases they get paid by the lenders directly only after successfully obtaining funding for their clients. If for some reason they are not paid directly by the lender, all the fees the professional loan broker will earn will be discussed with you before taking you to the lender. An agreement will be signed. No hidden fees or surprises.

How Do Professional Loan Brokers Add Value and Obtain You Better Rates?

Let us start with rates. It comes down to the relationship with the lender the professional loan broker has earned and nurtured. Unlike unprofessional transactional loan brokers, the professional relationship broker sends in dozens of well qualified borrowers to the lender every month. Lenders make money on successfully closed loans. The lender knows the broker can send these qualified borrowers to any lender including their competition. But they have a great working relationship with the broker. They want the broker to continue to send business their way. So, they offer the brokers’ clients their best rates and terms. Remember, the professional broker has earned this consideration overtime. They have nurtured the relationship with the lender and earned their trust. You benefit from this relationship.

This is why you could take your loan package directly to the lender who the professional broker is working with and not obtain the rates and terms the broker received for you. You are a one-time transaction for the lender. The professional broker sends dozens of borrowers just like you to the lender every month.

Now let us talk about the value the professional broker provides you. The professional brokers have relationships with many different lenders. The broker knows what loan criteria each lender requires to qualify for a loan. The broker can gather information from you at one time and match you with the lender best able to fund you. Most professional brokers call the lender after speaking with their client and review the borrower’s loan request and qualifications. They get a verbal confirmation the lender feels this is a loan request they can fulfill. This is important as now you will be working with a lender that has already heard your loan request and knows your qualifications and has indicated they can fund you.

This saves the client much time. The client doesn’t have to shop for lenders that can’t fund them. They don’t have to fill out multiple loan applications and provide documents to multiple lenders. They won’t have their credit pulled multiple times.

The client doesn’t have to waste time on the lending process. The client can spend their valuable time running their business. Not all lenders lend in all 50 states. Not all lenders work with your industry. Not all lenders offer the loan product you need. Not all lenders work with certain credit scores. Not all lenders work with businesses that have certain annual revenue earnings. The borrower doesn’t know the lending criteria of all the lenders they see in the Yellow Pages or on-line. So, they have to reach out to all these lenders only to find the lender can’t fund them. The professional loan broker knows the criteria of each lender they work with.

Summary

Professional loan brokers will save you valuable time. You are able to leverage their lender relationships. You can obtain better rates and terms than you could attain on your own. No upfront fees. No multiple credit pulls. Professional loan brokers only get paid if they are successful in funding your business. Most often they are paid by the lender, not the borrower.

Best of all, after you receive your needed funding, you have a professional on your team but not your payroll. When you have future lending needs, you know who to reach out to. A proven resource for your business. A professional loan broker.