Business Loan Brokerage Business Plan, Marketing Plan, How To Guide, and Funding Directory
The Business Loan Brokerage Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start a Business Loan Brokerage business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.
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Business loan brokerages provide a very important service to the business public given that they are able to source funds on behalf of economically viable small businesses and entrepreneurs. These companies are relatively immune from negative changes in the economy given that most of these businesses are able to generally provide the needed loans and lines of credit on behalf of their clients in most economic climates. In any given economic climate, there are always businesses that remain economically viable such as healthcare businesses where lenders are going to feel approved safe and appropriate to provide loans to these types of businesses. As such, many business loan brokerages – once they are established – will frequently develop a specialized niche in one of the field that allows them to remain economically viable in any economic climate.
The fees that are generated from the successful placement of capital typically range anywhere from 4% to 10% of the face value of the loan. However, these fees can change and are adjusted quite frequently depending on the complexity of each borrower. The startup costs associated with the new business loan brokerage are considered to be moderately low and these businesses can be started from $10,000 all the way up to about $50,000 depending on how much working capital is going to be needed at the onset of operations. A substantial portion of the startup capital for most business loan brokerages is typically geared towards the initial marketing budget which needs to be significant in order to develop leads for business loans. On a side note, an attorney should be consulted before launching a new business loan brokerage as there are a number of state laws that very regarding whether or not a commercial loan broker needs to have a lending license. Only a qualified attorney can make the appropriate determination as to whether or not what applicable licensure is necessary in order to broker loans on behalf of entrepreneurs.
A business loan brokerage SWOT analysis should be produced and developed in conjunction with a business plan, marketing plan, and other documentation that is going to be needed when launching business operations. As it relates to strengths, again business loan brokerages are typically able to produce revenues in any economic climate even during deleterious times when businesses are looking for lines of credit in order to remain cash flow positive. The startup costs are low, the barriers to entry are considered to be generally low, and the revenues generated can be substantial for a established business loan brokerage firm. Typically, the operating costs are considered to be moderately low with a substantial portion of the operating costs allocated towards maintaining an expansive marketing apparatus.
For weaknesses, these businesses do carry a significant amount liability given that large sums of capital are being handled and in the event of a loan default – the brokerage may be required to answer as to how they are able to source their information on behalf of their client base. As such, appropriate liability policy should be in place when owning and operating a business loan brokerage. Additionally, the demand for business loans does tend to wane during times of economic recession simply because people are not starting the same number of businesses that they were during an economic boom time. As such, and again – having a specialized niche in the field like healthcare, automotive services, and other industries that are less swayed by negative changes in the economy can assist the business loan brokerage with remaining profitable at all times.
As it relates to opportunities, there are a number of different ways in which these businesses can aggressively expand during the life of their operation. Foremost, many business loan brokerages can establish additional locations that will allow them to expand by offering services to a greater target market radius. Additionally, many brokerages will hire assistant brokers that will allow them to call on their contacts as it relates to the placement of capital. In some cases, business loan brokerages will source funds from private investors and third parties in order to be able to act in a direct lending capacity. It should be noted that converting a brokerage into a direct lender is a very expensive and time-consuming process but the financial results can be phenomenal if the entrepreneur can source high quality loans.
For threats, there are a number of continually changing regulations as it relates to providing commercial financing to the general public. The competition within this market is substantial, and one of the keys to thriving within this business is to be able to provide capital with a minimal amount of lead time. However, the demand for loans remain strong in any economic climate – and this will continue to be the case over the next 20 to 30 years.
Given the financial nature of these companies, most lending institutions are not willing to provide a substantial amount of capital support for business loan brokerage. If the entrepreneur that is starting this business does have a lot of collateral and they may be able to acquire a general working capital one credit in order to provide the services to the general public. Most business loan brokerages are financed either through owner contribute funds or from a private investor. In the event that the start of capital is going to be sourced from a private investor then a business loan brokerage business plan is going to be required. This business plan should have a three-year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. Additionally, an examination of the target customer should be included as well examining how much revenues it will generate on a yearly basis, industries in which they will operate, how far away they are from the business loan brokers location, and other relevant information regarding the regional area in which the brokerage will operate. Additional statistics include within the business plan should be immediate income, median household value, large businesses operating within the area, population size, and population density.
As it relates to industry research, there are approximately 12,000 independent brokerages that provide these services to the general public. Each year, these companies generally in excess of $12 billion in fees and provide jobs to about 70,000 people. The growth of this industry will remain in lockstep with the US economy in general.
A business loan brokerage marketing plan needs to be developed as well and this is usually done in conjunction with the business plan. Foremost, and expansive online presence needs to be maintained given that many entrepreneurs and small business owners are very well connected to the Internet and will use search engines in order to find service providers like loan brokers. The website should have functionality that allows individual entrepreneurs to directly contact the brokerage via the website. This website she listed among all major search engines including Google, Bing, and Yahoo. Additionally, a presence on social media is very important but not necessary in order for these businesses to become successful. Many people will try to find these types of services via recommendation in entrepreneurship communities that are prominent on social media platforms. As such, maintaining a page that showcases these services to the general public is important. One of the other ways that many business loan brokerages are able to maintain operations is through referrals. Many brokers will maintain memberships at local Chambers of commerce, among real estate associations, as well as through small business associations. These brokers often have relationships with certified public accountants, bookkeeping firms, and other businesses that provide accounting and financial advice to small business owners. This is one of the quickest ways that these businesses are able to aggressively expand their operations at the onset.
Over time, many business loan brokerages will also use pay per click marketing and search engine optimization in order to make sure that their proprietary websites are found very quickly. It should be noted that it can take up to one year for a business loan brokerage to develop a very strong foothold on the Internet as it relates to people finding their website when they do a simple search query for something like a business loan.
Finally, many business loan brokers to maintain ongoing relationships with banks and financial institutions as it relates to assisting customers that may be very good candidates for business loan, but that specific financial institution will not provide capital for. As such, these relationships can be reciprocal as it relates to working with independent entrepreneurs as well as small businesses.
A business loan brokerage can be a highly lucrative and highly profitable enterprise provided that the owner operator has significant contacts in the finance and lending industries, has a complete understanding of the financial products offered, and is willing to be able to operate substantially on a commission basis.