Do you want to start a commercial loan brokerage company? Or you need a sample commercial loan brokerage business plan template? If YES, i advice you read on. A commercial loan brokerage company is an alternative non – bank firm that stands as an intermediary between people who want to lend money and those who have monies to lend (Could be a bank); they lend money to people in a short – term basis.
It is indeed a commercial enterprise and the interest rate is normally higher than what is obtainable from the banks. No doubt starting this kind of business requires that you have a solid financial base, but the fact remains that it is a highly profitable venture and the risk involve is much.
Basically, people who can’t meet the necessary requirements set by banks when applying for loans make commercial loan Brokerage Company their choice. The commercial loan Brokerage Company understand the risk involved in issuing loans to people who don’t have adequate collateral but they know how to go about their business so as to minimize the risk of losing their monies to fraudsters. They bear the bulk of the risk when they apply for loan from the bank for their clients, but never the less, it is still worth their time and services.
If you have banking experience or any other related financial experience and you are looking towards becoming your own boss, then you should consider starting your own commercial loan Brokerage Company. One good thing about this type of business is that you can start on a small scale by lending money to family and friends and then grow it to a big and highly profitable venture.
The following tested steps would help anyone start a commercial loan brokerage firm from the scratch and build it to profitability within record time:
Starting a Commercial Loan Brokerage Company – Sample Business Plan Template
Table of Content
- 1. Acquire Relevant Qualifications and Experience
- 2. Build Your Network and Cash Base
- 3. Test-Run Your Business with Family and Friend
- 4. Create Policies and Processes That Will Ensure that You Get Your Money Back with Interest
- 5. Rent a Good Office Facility
- 6. Ensure Proper Documentation for all Transaction
- 7. Market Your Service
1. Acquire Relevant Qualifications and Experience
If you intend establishing your own commercial loan Brokerage Company, then you must endeavor to first get all the necessary academic qualifications and certifications, and then gather firsthand experience from the financial industry.
It would do you and your business a whole lot of good if you acquired the relevant experience before venturing out to start your own business. With the right experience, you will be able to know how to handle huge volume of cash, and how to avoid or minimize risks to the barest minimum et al.
In order to do very well in this line of business, you must have a strong financial base and also good network base. There is no point starting a commercial loan Brokerage firm if you don’t have any working relationship with people who can be willing to release money for you to give to your clients who want to lend money. So, you should build working relationship with banks and you must prove to be trustworthy or else you will struggle to convince people to release their monies.
3. Test-Run Your Business with Family and Friend
No doubt starting a commercial loan brokerage Company can be very risky, which is why it is advisable not only to gather the required experience and qualifications before venturing out, but also to test run it on a smaller scale with your family and friends.
The truth is that if you can’t successfully retrieve monies loaned (with interest) to your friends and families, then the probability of doing well on a larger commercial level will be very slim. Hence, it would pay you to perfect your skills before committing your time and resources to this type of business.
4. Create Policies and Processes That Will Ensure that You Get Your Money Back with Interest
One of the major challenges that people who run this type of business face is the challenge of getting those who lend money to pay back with the expected interest as at when due. The only way you can make good profits from this type of business and avoid using your money to settle money borrowed by defaulters is to ensure that your put in place policies and processes that will ensure that you get your money back with interest as at when due.
For example, you can restrict your borrowing to only those who are employed and can afford to drop post dated check in lieu of the money they borrow and also you can also ensure they produce guarantors that have the capacity to pay back when they default.
5. Rent a Good Office Facility
To give your commercial loan Brokerage Company a good outlook, then you should consider renting a decent office facility. Although you can operate this kind of business from the comfort of your home, but it is always advisable to try as much as possible to operate away from your house due to security challenges. So if you have the required capital, then go ahead to rent a good and well furnished office space.
6. Ensure Proper Documentation for all Transaction
One key thing that you must always do is to ensure that you keep proper documentation of all transaction to avoid unnecessary argument from clients. You must make sure all agreement reached by all parties involved must be signed by all, and a copy of the document must also be handed to all those involved. And also you must clearly state and reach an agreement with your client (bank or individual) on percentage on interest you are to get when you help processed loan.
There are loads of people out there who need urgent loans either on a short term basis or even long term basis that can’t approach the bank, because they don’t have the required collateral. However, these people would gladly jump at your service once they hear about it. So in essence, it will do you a whole lot of good if you advertise your business to the general public.
Lastly it is important to state that in most cases, it is not a challenge to get enough people who need loan, but the challenge is to properly screen them to be able to get the right people that can pay back without stress. These are the 7 steps needed to help you start your own commercial loan Brokerage Company.