In simple terms, our primary service is that of locating the best fit lender and loan for your business need and helping you be successful in securing the financing you need for your business. We are referred to as a Commercial Loan Broker and are typically paid by lenders with a referral fee.
We have connections to over 90 lenders who all have different lending appetites. That means we know where to take you to have a successful outcome. Our lending partners are made up of banks and not banks. The banks we partner with are certified as Preferred Lending Partners with the SBA. That is good new for you because they can move faster, since they don’t have to wait on the SBA’s approval and guidance on each step, like many banks do.
In 2008, the banking crisis in the United States led our government to enact new regulations in an effort to ensure that the same thing never happens again. These new regulations caused the banks to tighten their lending windows and/or strip their balance sheets of certain debt. Many companies who once enjoyed easy access to capital were left searching for financing to grow or even continue their businesses. This implosion of funding facilities left a hole in the financing market and caused thousands of small and large companies scrambling for cash for the next few years. Some were forced into bankruptcy while others did well to survive. But there was one other group that thrived because they were able to find the funding they needed.
When the banks reduced their lending windows, they essentially reduced the risk they were taking to a bare minimum. But that did not mean that the loans they declined were a bad risk. The banks just had to abide by the new risk regulations. That opened the market to a new kind of lender. Alternative lenders are lending companies that do not accept deposits and are only interested in earning interest on the money they loan to you. Since they are not banks, they are not restricted by the banking risk regulations and love to lend to those companies that are a good risk, but just don’t fit the bank’s criteria.
Alternative lenders started popping up across the country a few years after the banking crisis, and like banks, each has its own unique appetite for loans. Some like Real Estate, some like Equipment, some like Lines of Credit, some like Fix and Flip projects, etc.. Today, there are alternative lenders in every segment of commercial financing. And, while most are honest and customer friendly, like any other industry, there are a few that are not. So, since banks and alternative lenders alike each have various lending and risk appetites it can be a little difficult for the average person to navigate and choose the best fit lender (whether bank or alternative lender), even with the help of online reviews and ratings.
This created yet another business opportunity for those who know the financing market, understand the alternative lending process, and have connections with those lenders. This is called a Commercial Loan Broker. The role of a Commercial Loan Broker is to connect a business borrower with the best fit lender for the need. This can drastically reduce a commercial borrower’s time and effort in searching for a lender that is both interested in that loan type and a good fit for the borrower. As a Commercial Loan Broker, we work hard to get you a financing offer from an ideal lender. And we do that for free, until you actually close a loan that we introduce you to. At that point, a fee is due equal to between 1% and 2% of the loan value, depending on the loan structure. When we introduce you to a loan that you are interested in exploring, we will send our Client Agreement that spells this out completely so you can decide if you want to proceed.
As mentioned above, after the banking crisis, a small percentage of businesses found alternative lenders that helped them grow or maintain. That gave them a huge advantage as the economy began to turn positive. The Federal Reserve Bank of Cleveland recently reported that alternative lending is becoming more mainstream as small businesses learn about the opportunity to find funding outside of the banking industry. Those alternative lenders are often called “story lenders” because they do not typically make decisions with just numbers. Instead, they listen to the story. This gives the borrower an opportunity to explain the numbers when there is a justification for something appearing less than favorable, which we all know is common in business.
Today’s financing market is much different than it was just 10 years ago. Funding is available for businesses but it may not be where you are used to finding it. Banks are still loaning money and we have great relationships with both banks and alternative lenders. But, where can you get the best deal and how do you approach the lender in a way that puts you in the best light? Our financing specialists will help you every step of the way to pull together all required information while helping you present to your advantage.
Our team is diverse, having experience in investment and owner occupied commercial real estate, healthcare, manufacturing, equipment, & SBA funding. Whatever your need is, we can help you. Give us a call for a free consultation with no obligation. We can help!