Loan Broker / Business Advisor
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Loan Brokers Vs. Direct Lenders
What’s the difference between Direct Lenders and Loan Brokers?
Success: What makes good business sense?
In general, direct lenders offer financing terms that may or may not be the best option for your success. As loan brokers, we are looking for the best financing solutions available that result in you obtaining your success goals. This may mean creating a customized financing structure that maximizes your company’s funding while minimizing the costs of financing. A direct lender may avoid customizing solutions for you out of concern for maintaining credit policies and managing costs.
Keep in mind that loan brokers, unlike direct lenders, have contacts for many different lenders and funding sources. This allows us to offer you significant advantages when seeking out financing sources and maximizing your options.
Advantages of Loan Brokers compared to Direct Lenders.
Sometimes borrowers can avoid broker fees and find a direct lender on their own. However, that requires time and effort that many business owners prefer to focus on working in their business. After all, no one makes money while they are searching for the ideal banking relationship. One advantage of a loan broker is that you can focus on your business while we pursue your preferred financing.
A second advantage is a financial professional who is in your corner, analyzing information and communicating to all the parties involved what financing is needed and what your company’s financial performance is. This loan broker service is invaluable, as few direct lenders have an understanding, especially an industry specific understanding, of how the finances of your business work for you. We have the ability to delve deeply into the numbers, providing educated conclusions that are easy for all parties to understand and agree on. When direct lenders understand the ‘what’ they are lending on they can more easily understand the ‘why’. Dramatically increasing the probability of your financing proposal resulting in approval.
As loan brokers, we not only have relationship with direct lenders, we also have relationships with equity financiers and venture capitalist sources who may provide equity funding when it is more appropriate than raising debt. This is a service that direct lenders are not typically able to provide and may not even be able to refer to.
Defining Your Success.
We recognize that as a business owner, you have a definition of what success means for you and your business. We know that helping you means making life better, happier, and healthier financially and we believe financing solutions should result in your success. When you need financing options, going directly to lenders may be a very inefficient use of your time and talents. That’s an opportunity to invite us to help you, we can make finding your financing solutions easier and quicker.
Our goal is simple: to obtain business financing that works for your success.
Let us help you find the best possible loan for your business. Contact Us today to get started!
5 Tips For Getting A Better Business Loan
Thru the power of the internet, prospective business loan borrowers can obtain business loans through an online application, this begs the question: Does it matter if your Lender is on-line or off-line?
Business owners beware!
When you’re taking a business loan, you’re placing your future opportunities on the line! You are obligating your business and yourself to repay the loan, but at what costs?
While obtaining a business loan online might be fast, easy, and a convenient way to get a loan–it could also be the most expensive! This is detrimental to your business cash flows.
There are many articles in the mainstream media and in industry-driven publications that spin stories on how “online marketplace” lenders are going to take over the banking and traditional lending industries. Hundreds of internet ads pushing business owners to apply for “fast business loans” and discouraging business owners from pursuing traditional financing. Don’t be tricked!
There is no doubt that the internet has had a dramatic impact on these industries, but guess what–many businesses are still going to the bank, still using loan brokers, and are still obtaining traditional financing from non-bank lenders. Why? Because it makes good business sense!
Business loan costs.
The most important thing for a small-business owner to realize is that it doesn’t matter where their loan is coming from or how sexy or simple the process is. What matters is that each business owner gives themselves the time to make an informed and intelligent decision about the costs of obtaining business financing.
Do you know how expensive your business loan is?
The online ads can be compelling. Some of the online lenders/brokers actively promote a “Lowest Rate Guarantee” but read the fine-print! It’s only for online lenders.
Some of these online lenders are offering short-term on-line financing with APR’s of 57–100 %!
Informed business owners under most circumstances would never agree to this sort of ‘pay-day’ loan arrangement for their business. Especially when they understand that with a few extra weeks of work they can obtain a revolving loan from an off-line alternative lender with an all in APR in the low 30′s. This offer is far from ideal, but it’s much better than the previous offer.
Even better! When business owners find out that they can obtain an annually renewing revolving line of credit from a reputable bank or traditional lender with an all in APR that is less than 15%, or that they can obtain an SBA loan for less than 8% APR, they realize that traditional lending compared to the alternatives makes good economic sense!
The Five Tips!
- Don’t wait for an emergency! Minimize your downside risks and the upside will take care of itself! The best time to get a loan is when you don’t need one.
- Don’t buy the hype! If it sounds too good to be true–it is. No such thing as a free lunch.
- Contain the costs! The difference between a few weeks and a few hours of work could be tens of thousands of dollars a month.
- Know your market! Get with the lender that understands your business and build up that relationship.
- Get expert advice! Speak with at least one professional advisor or mentor before accepting an offer. They may provide invaluable insight!
As a final note, don’t be shy or bashful. Building a business is hard work. There are times when capital will be needed. Sometimes the reasons are to support growth and other times the unexpected happens. You are not alone! We are here to help! So get the support you deserve and don’t let a bad loan ruin your business!
Is Your Business Over-Leveraging or Under-Leveraging Debt?
It’s a simple, but important question.
Leveraging Your Company Is A Balancing Act.
There are many important variables and tools that go into building a business. People, product, service levels, marketing messaging, culture, financing – just to name a few. In the middle of the ever-complex challenge of operating a business the question of over-leveraging or under-leveraging the business can be a difficult one to answer.
In some cases, it’s possible to restructure and refinance debts in order to free-up cash flows. But for others, over-leveraging their cash flows or collateral means there are few alternatives to slowing growth, turning away business, and paying down debts out of existing working capital. Even worse, some companies are borrowing the maximum that they can in terms of cash flows and credit worthiness. Even if they wanted to, borrowing more money and using it to expand or grow is not an option.
Some substantially under-leveraged companies are in the completely opposite situation. If they wanted to inject capital onto their balance sheet there are plenty of opportunities to do so. And in some cases, the fact that they haven’t is restricting growth.
Questions about leveraging your business:
If you are under-leveraging your business, there are a few key questions to ask yourself:
1. How much money could you borrow, at what rates, and over what terms? If you “maximize leverage,” taking full advantage of the company’s cash flows and assets, how much money could you obtain?
2. If you obtained this money, what you would do with the cash to grow your business?
3. Do the potential benefits of using borrowed money to grow your business outweigh the risks?
Leveraging yourself to the hilt is not the goal of this exercise. It’s to help you determine the acceptable level of risk for obtaining your growth goals. Learning to make decisions like a Chief Financial Officer would for a large company is to start managing your business from the balance sheet instead of solely from the income statement. We all know that the income statement is important, it’s where we can track sales and monitor our expenses and profitability margins. However, you track your wealth on a balance sheet, and the equity growth in your business is the financial health measure.
Borrowing Money:
If you can borrow more money, and have a good idea what you can do with it — come up with three scenarios:
1. What is the worst that would happen? If the investment is a disaster and doesn’t generate incremental revenue – what would happen to your cash flows as you pay off the debt?
2. The other side of the coin is the home run scenario. If everything worked out perfectly, how much incremental profit would you generate, and how quickly could you pay down the debt?
3. What is the “most likely scenario”? It’s most likely something in the middle between home-run success and abject failure.
Sometimes working through this exercise can unlock whole new ways to think about aggressively growing your business.
Whether you are seeking financing to grow your revenues to the next level, or you are just starting, North Texas Loan Advisors, LLC has the professional experience and expertise to help you successfully determine the level of leverage you need in your business.
6 Questions to Ask Your Loan Broker
Your Loan Broker Has The Answers.
Your professional loan broker can offer you advice based on experience. Their informed opinions and valuable market knowledge can be essential when preparing your business loan application. Whether you are looking for a U.S. Small Business Administration guaranteed loan or a commercial loan you deserve an advisor who provides one-on-one business counseling and guidance. When you meet with an experienced loan broker, he or she will ask plenty of questions: How big of a business loan? What’s your credit score? Is your business profitable? etc.. However, you need to ask the loan broker some important questions too!
6 Questions To Ask Your Loan Broker:
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Can I get financing for my business startup/expansion idea?
A loan broker can help you with research and loan structuring to help your business ideas thrive. They have databases and professional insights to help you in obtaining the best type of financing for your venture. Additionally, they can help you determine if there is a lender that is a good match for you.
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How much capital should I borrow?
Business owners wrestling with questions of how to determine the right loan amount to request are wondering: How much can they qualify for? How much money will accomplish their goals? And how much is too much? Some business owners underestimate the amount of money they need to borrow because of cost concerns. Others are exuberant and believe they can borrow more than what most lenders would be willing to extend in credit. Loan brokers can help business owners realistically estimate how much capital they need. Additionally, they can help lenders understand the loan amount you are requesting by justifying it with a professional loan proposal.
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Am I prepared to approach a lender?
A business plan alone isn’t enough when you approach a lender to ask for a loan. You will need to put together a loan package, and a professional loan broker can help you do that. Loan package presentations can include everything from the initial presentation requesting the loan from a lender to the professional packaging that is sent to the Small Business Administration.
A basic loan package should include:
– A business plan, with all of the appropriate business financials and projections.
– Personal financial information, including tax returns and credit reporting.
– Legal documents (i.e. articles of incorporation, partnership agreement, licenses, leases, franchise agreements)
– A budget describing the spending of loan proceeds.
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What type of loan is best for my business?
A loan broker can help you obtain the right type of loan based on your business needs. Determining the correct loan structure, whether you need a term loan for long-term borrowing or a revolving line of credit for short-term borrowing, or whether or not you need a commercial loan or an SBA loan, can be a difficult task. Structuring the correct type of loan and using the correct lending vehicle for your needs is critical, and can mean the difference between success or failure.
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What financing options are available to my business?
When it comes to business funding options, a loan broker knows the marketplace; they’re familiar with all of the federal, state and municipal loan programs, and have relationships with local lenders and community bankers. Lenders are more likely to consider lending to businesses that have worked with a professional loan broker. They provide credibility to the professional loan request package. A professional loan broker isn’t going to send a client to a lender if they don’t think they’re ready.
Although online lenders such as Lending Club and OnDeck have become more common in recent years, lending advisors know that these are “loan farms” playing a numbers game to reach success, the borrower doesn’t receive valuable one-on-one guidance and therefore it is not recommended for business owners to seek out these financing sources.
“I don’t refer clients to programs that I’ve not physically spoken to a loan officer about,” Benjamin F. Johnson V, Principal of North Texas Loan Advisors, LLC.
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Are the loan terms a lender has offered to me good?
Before you execute a loan agreement, a professional loan broker will help you read the fine print and understand the terms and conditions. When a lender is showing interest in your loan, they will typically issue a conditional commitment letter offering you terms. A professional loan advisor will be available to guide you through the offer and help you make a determination on whether or not it works for your business.
Whether you are seeking financing for your next equipment purchase, moving your business to a new location, looking to grow your revenues to the next level, or just starting up, North Texas Loan Advisors, LLC has the professional experience and expertise to help you obtain success.