How to Become a Business Loan Broker: The Essential Guide

What is a Business Loan Broker?

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A business loan broker connects business owners with lenders and helps them agree to a funding arrangement. Most small businesses have to borrow money at some point, whether to sustain operations or fund business growth and expansion.

However, there are many business funding and many lenders who offer them. The given options can make the world of business financing seem overwhelming for some small business owners. Instead of going to lenders directly, some businesses employ a business loan broker.

A broker can help identify the best financing products for their small business clients and connect them with a lender or marketplace that can serve their business needs well. Most business loan brokers receive compensation for their time and efforts in the form of a commission or percentage of the financed amount.

What training do I need to be a Business Loan Broker?

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It’s possible to break through as a business loan broker without a college degree, but some lenders or brokerages may require one. A bachelor’s or associate degree in business, finance, or a related field could help but is not required.

Regardless of your level of education, a business loan broker must have detailed knowledge of the industry, loan options, funders, and more. If you’re working with a firm, you might be able to get in-house training. Some brokers will work as an intern or entry-level brokers at a firm before branching out independently and bringing over previous clients.

There are more than a few options for industry-specific training programs and certifications for business loan brokers. Most states don’t require a certification, but some do. Certification from an accredited trade organization can also help you market yourself to potential clients. The Small Business Finance Association (SBFA) provides some valuable insight and training materials that you can use.

Aside from education and industry-specific training, most business loan brokers need specific “soft skills” to succeed. Brokers should have good interpersonal and relationship management skills. You should also possess the skills and knowledge to help clients complete loan applications, and answer questions thoroughly and with confidence.

Who uses Business Loan Brokers?

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Researching business loans and lenders is a time-consuming process. Companies often don’t have the time to research their financing options to find the best deal independently. Many will turn to a business loan broker to do that legwork for them. Here are the valuable skills and knowledge business owners seek in a commercial loan broker.

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Industry Expertise

The more you know about loan and financing options, funders, disclosures, and other aspects of real estate loans and business financing, the more detail you can provide your clients. You should be able to discuss the lending packages using the appropriate lingo and terminology and explain it to your clients in simple terms.

Finding the Best Deal

One of the main reasons business owners use a loan broker is to find a better deal than they could on their own. Brokers have more detailed knowledge of the available options and often maintain relationships with the different lenders in the space. However, finding the best deal doesn’t always mean the lowest cost or highest loan amount.

A good business loan broker will look to understand the client’s business and find the loan programs and repayment structures that best match the business’s needs and cash flow. For example, sometimes, a line of credit might make more sense than a term loan. While the term loan might carry a lower interest rate, the client could be more likely only to use some of the line of credit and then pay less in total interest.

Multiple Loan Offers

When a business applies to a direct lender, that loan application is only relevant to that specific lending institution. As a broker, you can shop a loan application around to multiple lenders. If approved or pre-approved, you can bring multiple loan offers back to your client and help them determine the best one available.

A Trusted Partner

Ultimately, business owners work with business loan brokers they trust. The client trusts you to act in their best interests.

The most successful brokers excel at finding win-win-win scenarios: the client wins by getting a good deal that helps grow the business, the lender wins with a borrower who pays reliably, and you win by earning a commission and developing your relationship with both the client and lender or lending marketplace.

How to become a Business Loan Broker:

Business loan brokers can partner with United Capital Source by joining our ISO affiliate program. Everything is done online through our website, so you don’t have to email or send anything else. You can also access our guide on how to join the program.

Follow these steps to sign up.

Step 1: Complete the Referral Partner Form

The first step in the application process is to visit our Business Loan Affiliate Program page and complete the form on the right-hand side of the page.

Step 2: Continue to “Sign Up Now”

You’ll be redirected to a thank you page after completing the form. On that page, click the “SIGN UP NOW BUTTON.”

Step 3: Complete and Submit the W-9 Form

A pop-up window will appear after you click sign up now. Read the instructions and click “Accept,” which will bring up the electronic W-9 From. Select your entity types and fill out all required fields.

Then click on the “Signature of U.S. Person” field to open the signature pop-up box. Enter your e-signature and click “Sign.”

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Step 4: Enter Payment Information

The next step affects how you receive commission payments for referred clients who accept funding. You’ll complete the ACH Authorization Form using your bank information.

This is essentially a direct deposit form. You will also upload a copy of a voided check. Once you’ve entered the required information, click the “Next Required Field” button.

Step 5: Complete the ISO Agent Sales Agreement

The final step is to finalize and submit the ISO agreement. Fill out all required fields. Once completed, click “Next Required Field,” which will turn into a green “Finish” button. Click “Finish” to submit the forms.

After submitting the form, you will receive an email with a link to the ISO sales portal, where you’ll receive your ISO number and Portal Submission instructions. You can then begin submitting files.

Frequently Asked Questions

Here are some of the most common questions about business loan brokers.

What are the advantages of being a Business Loan Broker?

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Successful business loan brokers have high earning potential and the flexibility to choose their own destiny. Brokers can work with a brokerage firm or as independent agents. That flexibility allows for successful brokers to be their own boss and strike a work-life balance that suits their needs and lifestyle.

Some brokers can earn six figures while enjoying an independent work schedule. An estimated 30 million small businesses need funding – and help to find it. Commercial lending is a growth market with new opportunities for lenders, brokers, and business owners.

Just as businesses needing financing turn to brokers to help find the best financing options, funders often seek brokers to extend their client base and bring in new clients. Most lenders, such as online lenders or even credit unions, offer affiliate programs for business loan brokers. There’s also a market for brokers in the space who primarily focus on lead generation (lead gen) for lenders and lending marketplaces.

The industry is also constantly evolving with new rules and regulations. While staying current on market trends and rules represents a challenge, all business challenges are opportunities. A changing market gives you the opportunity to be at the forefront of implementing the changes and bringing the best products to your clients.

Becoming a business loan broker is also a relatively open market. You don’t need significant startup capital, a finance degree, or tons of industry experience to get started. The main determining factors for loan broker business success are a passion for the job, the proper training, the ability to forge and maintain client relationships, a strong work ethic, and working with the right lending partners.

Should I open a commercial loan broker business?

When researching becoming a business loan broker, you may see suggestions about opening your own brokerage business. It could make sense in some situations, but you would need significant startup capital to get your own business started.

In addition, you’d have to register your business, file legal proceedings, and file with the IRS for a taxpayer identification number. Joining an affiliate program with a reputable lending marketplace, like United Capital Source, has a much lower barrier to entry.

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It’s one of the best ways for brokers to get started to help develop their client base. The decision ultimately comes down to your goals and what you’re willing or able to invest in starting your own business.

What business loans can I offer my clients?

United Capital Source is a business lending marketplace with a full suite of loans and lending products. You can connect your clients with business loans that fund various needs, from working capital and equipment financing to commercial real estate loans.

Lending options available through our ISO program include the following:

  • Merchant Cash Advance.
  • Business Line of Credit.
  • Invoice/Receivables Factoring.
  • SBA Loans.
  • Business Term Loans.
  • Revenue-Based Financing.
  • Equipment Financing.
  • Commercial Real Estate Financing Solutions.
  • ERTC Advances.
  • Cannabis Funding.

The diversity in lending products gives you more options to find funding that can solve your client’s business needs. Business owners can use the funds for working capital, equipment purchasing, business expansion, or even paying off existing debt.

Why should I partner with United Capital Source?

You’ll get to work with a reputable company with a proven track record of success and earn commissions along the way. We offer an extensive line of business loans and funding programs. We are accredited with an A+ rating by the Better Business Bureau and have a 5-star rating on Google.

Our loan applications are quick and easy. Your business clients can receive funding for certain loan programs in as little as 24 hours after completing the application process.

You will receive dedicated training and support as a referral partner. That includes full sales support.

The United Capital Source difference also includes the following benefits:

Fully Automated Submission Process

Your clients get connected to our extensive network of lenders with seamless integration into our system.

Proven Record & Reputation

With over a decade of experience, our team members earned more than 1,500 5-star reviews. You and your clients can benefit from our proven success.

Fully Licensed in All States

When you partner with us, you can rest assured that your customers can access our business loan products regardless of location. We can also facilitate Canada deals for your clients in the north!

Multiple Industries

We provide funding for businesses to grow in over 1,000 industries and subsectors. With our diverse product line and lender network, chances are we can find financing for your customers regardless of their industry.

Becoming a Business Loan Broker – Final Thoughts

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Business loan brokers with the proper training and a strong work ethic can be their own bosses while making six figures a year. You will often need more networking than other businesses because so much of what you do is relationship management.

When you partner with UCS, you get a dedicated teammate who can help you provide more financing solutions to your clients. Call us or complete the business loan broker affiliate program form to get started. Our reps can answer any questions you have about the program.