Word of advise…Do Not Pay A Broker Fee for an alternative small business loan. Alternative business lenders providing unsecured working capital advances will pay a broker directly. Often times we see other brokers charging for their services while still getting paid by the lender. Lenders will pay handsomely for deals that brokers bring to them because the cost for marketing to attract small business owners in need of capital is very expensive. They view the broker as their “marketing team.” Most alternative business lenders do not market at all.
They rely on brokers to do all the leg work for them. For this, brokers do get paid based on several factors. It can add up to quit a bit of money but the borrower does not know how much. As long as the small business owner is getting a good deal there really is no reason for them to know how much their broker is getting paid from the lender. It is not an easy task for brokers to attract prospective borrowers. It is not cheap either.
Broker Fees Received For Alternative Small Business Loan
A broker spends hours, days, weeks, weeding through leads and making 100’s of calls to track down small business borrowers. They usually work on 100% commission. It is in their best interest to help the small business owner needing capital find the very best deal because should that borrower need capital again, they will most likely remember the broker and use his services a second, third, fourth time. The broker will get paid by the lender each time that same small business owner borrows and receives an alternative small business loan.
Alternative Small Business Loan – The Value of the Broker
Many borrowers in this sector may ask why not go directly to the lenders for an alternative small business loan? They certainly can do that. They will need to fill out an application for each lender and submit paper work to each as well. Every lender has different document requirements. The broker’s value comes into play at this level because when you use them you only have to submit one application and one set of documentation that is acceptable by all alternative small business lenders. He/She will also know which lenders are best suited for your capital needs based on your industry, seasonality, cash flow, time in business, and personal FICO. This is where the broker earns their “keep.” They will be able to properly place your file and provide lending decisions much faster and get you the capital you need a lot faster.
Brokers, for their services, will be paid directly by a lender. Do not fall into the trap of sending them $50, $100, $500 for them to do what they’re already getting paid for. Do not sign any forms that will allow a broker to charge you a fee directly once you receive your capital. While there are a few alternative small business lenders that will disclose the broker fee, most do not. An alternative small business loan should be free to apply, free to shop, and free to receive (obviously you pay the lender a fee).