Locating the best commercial loan broker will require you to compare several of them in order to find one that specializes in financing for your type of business. The number of different lenders that a loan broker has a relationship with is the main reason you are considering them as an option. The broker saves you time by shopping for the best rates at all of their sources, to find the loan that best meets your requirements. A broker is the middleman between you and a lender, so the fee that they charge for their services may not be worth paying unless they find you a better deal than you could on your own.
What to Ask the Commercial Loan Broker
Once you have selected a broker who has experience with funding for your type of business, here are some questions you can ask to help determine if the broker is right for you:
Question # 1 - How much are they willing to finance?
The amount a loan broker can finance will depend on the sources they have for commercial lending. If they are able to recommend a lender that has the loan-to-value ratio limit you need for your loan, the rates and fees will be the next item to discuss.
The entire cost of the loan needs to be taken into consideration before you accept a loan offer, and not just the lowest down payment a lender will require for an approval. If you decide that the rate or fees are too high, ask the broker if they can find a lender that will finance a higher amount.
Question # 2 - What types of relationships do they have with commercial lenders?
You are considering the commercial loan broker because they have many different options for your financing. Find out if they have a favorite lending institution for your type of loan. Ask them if there are other sources that will look over your application, so you can weigh several different offers against each other.
The loan broker will give you their opinion on which is the best lender to use for your financing, but it is up to you to try and figure out the main reason they are recommending this lender.
Question # 3 - Do they get a fee from the lender?
Even if you have to pay a fee to the commercial broker for their services, they may also get a fee from the lender for providing new business funding. If the cost of all the fees is offset by more favorable financing terms, you should not begrudge the broker from using a lender that pays them a fee.
If you have your broker shop your loan request to multiple loan sources, you can choose one that does not pay the broker a fee if the terms are better. You can also negotiate with the broker, to try and get them to charge you a lower fee for their services.