Why You Should Use a Business Loan Broker

Business Expansion

Jacques Famy Jr
Review By Todd Millman

If you are a small business owner looking to secure financing, you may want to consider working with a business loan broker. A loan broker can save you valuable time and effort by doing the legwork for you and finding suitable lenders willing to work with your unique financial situation.

In addition to saving you time, a business loan broker can help you navigate the often-complicated lending world. They have a deep understanding of the lending industry and can help you understand the pros and cons of different loan options and the potential risks and rewards associated with each. Overall, using a business loan broker can be smart for small business owners so here we look into why you should use a business loan broker.

What is a Business Loan Broker?

A Business Loan Broker (Commercial Loan Broker) helps small businesses by arranging business financing through a network of business financing products and lenders and funders that the business loan broker has built a relationship. This is commonly done within a loan brokerage firm or as an independent broker. With great passion and the proper training, they become the linchpin for business finance product searches.

  • They may offer a diverse array of options that can be secured traditionally, through brick-and-mortar institutions, or online, leveraging the increasing scope of online loan brokerage arrangements.
  • With an intuitive ability to forge enduring client relationships and a strong work ethic, they identify financial needs of small business owners and propose suitable solutions. This essentially is the strength of their loan brokerage operation - successfully crafting business funding solutions.
  • The brokers usually earn fees from the lending parties and do not typically charge their clients upfront.
  • Quite adept in a wide range of business financing products, they specialize in offerings such as Long-Term Loans, SBA Loans, Business Lines of Credit, Short-Term Business Loans, and Merchant Cash Advances.
  • They also work with Business Cash Advances, Equipment Financing, Invoice Financing, Asset Based Lending, Accounts Receivable Financing, Commercial Loan, and Commercial Real Estate Loans.

As the tripod of a successful brokerage business – the client, lending partners, and the Licensed Loan Broker, they are instrumental in the realm of small business funding. Their inherent experience lending, competence, and skills loan brokers must have forms an invaluable part of any business loan broker.

Do Business Loan Brokers Specialize in Certain Business Funding Products?

Every commercial loan business broker offers different business loan options they sell. However, the success of a broker largely hinges on their training, knowledge and experience they have received, which in turn enables them to maintain substantial client relationships and opens up opportunities for their customers.

Business loan brokers often specialize in specific products like SBA loans or merchant cash advances, thereby underlining the need for robust broker training programs.

It’s essential to partner with a business broker who offers a plethora of business funding products such as SBA loans, business lines of credit, long-term business loans, short-term business loans, accounts receivable financing, invoice factoring (also known as receivables factoring) and merchant cash advances. Such a broker should ideally be registered and have gone through an exhaustive vetting process. This ensures they are well-versed in commercial loan regulations, requirements, varied business financing options, and competent in evaluating receivables, assets, and other possible collateral.

A Business Loan Broker Versus a Direct Business Lender: What are the Differences?

A Direct Business Lender or Funder offers specific products that they originate, process, fund, and service payments. In this sphere, consumer banking institutions often serve as direct lenders.

  • Underwrites and funds business loan products
  • Overlooks other business loan financing solutions available in the business finance marketplace through their application process. Remember that numerous lenders, including those in business finance, are not legally required to provide you with the most suitable loan product for your unique financing needs.

A Business Loan Brokers, through their lending network, typically refer to direct lenders but do not fund the business finance products themselves; they largely assist in the application process. Should you require a comprehensive comparison of business loan products that align with your needs, consider a Loan Broker.

  • A business loan broker's worth largely depends on their knowledge of business finace product diversity, the execution of transactions during the application process, and the relationships built within the lending partners in the financial community.
  • Utilizing a broker's services can also amplify the chances of securing loans with competitive lenders rates by presenting the borrower in the best light to prospective banks and online business lenders.

The 9 Best Business Financing Options that Business Loan Brokers Provide

  • Business Loans
  • Business Line of Credit
  • Small Business Administration (SBA) Loan
  • Short-Term Business Loans
  • Long Term Loans
  • Equipment Financing (either term loans or leases)
  • Business Cash Advance/Merchant Cash Advance
  • Invoice Financing
  • Purchase Order Financing
  • Business Acquisition Loans
  • Start-Up Business Funding

Among the specialized business financing options loan brokers provide, they enable businesses to pick through product diversify the best option to full fill there need.

What types of Lenders work with Small Business Loan Brokers?

  • Traditional banks
  • Credit Unions
  • Private Lenders
  • Online Business Lenders (Fintech)
  • Long-Term Business Lenders
  • Equipment Financing Companies
  • Invoice factoring Companies
  • The Small Business Administration (some products require collateral)
  • Alternative Lenders
  • Hard Money Business Lenders
  • Commercial Lenders

All these entities form an essential part of a diverse lending network that brokers must possess. This allows brokers to find suitable solutions to businesses by comparing different lenders rates. As lending partners, they work together to provide business loan offers with the most favorable terms and competitive interest rates.

What are the Pros and Cons of Working with a Small Business Loan Broker?


  • A broker has access to many different lenders in the business finance marketplace
  • No Upfront or funding/closing fees for services rendered
  • Can provide a few options at the same time
  • Can save time, energy, and the hassle of comparison shopping


  • Could be a specialty broker that only focuses on certain areas of brokering business finance products
  • May not be directly regulated by any Federal or State agency. It's important to screen the reputation of the broker you are working with.

How to Choose the Best Small Business Loan Broker?

  • Evaluate the expertise of brokers' product knowledge. Consider their qualifications in the loan business, how long they've been working, and their work ethic. Verify if the broker's entity encompasses rich experience in the relevant field.
  • Analyze the assortment of product offerings, loan programs, and different lenders the broker collaborates with. Be sure to scrutinize the programs they hold with specific lenders. Ascertain how many lenders they work with and ask if they offer SBA loans and necessary documentation. The wider the scope of their product line, the better the loan offerings they can present.
  • Discover their process efficiency in securing small business financing. Rapid and efficient procedures could indicate a great business loan broker to work with.
  • Validate their reviews with independent third-party companies that operate separately from their enterprise, such as the Better Business Bureau. However, be cautious about Trust Pilot; it's not a reliable source for a brokers' businesses due to their compensation model. Ensure you're dealing with a reputable business loan broker.
  • Most business loan brokers abstain from charging a fee for loan applications or their professional services. But, it's imperative you're aware of all existing costs or fees in any business funding.
  • Confirm whether all loan offers are disclosed through formal term sheets or appropriate disclosures when the offer is made. Always compel a copy of a proper loan disclosures and loan agreement for review and consideration.
  • Assess the broker's service quality level. Do they deliver a service and set efficient timelines to operating their business? Does the broker act in your best interest?
  • Identify the broker's marketing tactics and referral mechanism. Do they boast a recognizable brand in the business finance space? As a client, your confidence in the position in the industry your broker has achieved.

12 Warning Signs Small Business Owners should look out for when Dealing with a business loan brokers

  1. Company Website: Examine the broker's or lender's website meticulously. Ask yourself: Is it current, informative, and comparable to other reputable bank sites? Look for an accessible submission form and check for sections dedicated to legal information, privacy policies, and contact details (email address, physical location, and phone numbers for various departments). These elements essentially indicate the transparency and dependability of the broker or lender.
  2. Physical Address: A quick Google search of the loan broker's address, and a glance at Google Maps for the location's image can confirm the credibility of the business. Ascertain if it’s a genuine business address, or merely a shared office space, co-work office, residential address, UPS Store, or mailbox center. An established location suggests a broker more likely to provide a reliable service.
  3. Company History: Cross-verify the broker's history with third-party sources like the Better Business Bureau. A finance broker less than three years in the business may prompt you to request a resume to ascertain experience. Proper documentation, including the broker's LinkedIn profile, can provide further insight into their professionalism and credibility.
  4. No Independent Reviews: Refer to independent reviews of the broker from reliable platforms like Google or BBB. Platforms that demand a monthly service fee, like Trust Pilot, possess a review model that is controlled and lacks proper independence.
  5. Access/Communications: Quality customer service is crucial: ensure both the loan broker and a company representative can be easily reached. Keep track of service and response levels, including email response times—long delays can be a red flag.
  6. Better Business Bureau: Is the finance broker recognized by the BBB? Are they in good standing with positive customer reviews? A reliable loan broker should at least be on file with the BBB.
  7. Any Federal, State, or Local Actions. Has the broker complied with all fair-lending laws, or have they been involved in any negative actions with Federal, State, local governments, customers, or employees? Any such incidents could signal a warning.
  8. No Clear Fee Disclosure or Term Sheet-Opt for financing brokers who can provide clear documentation, such as a “Term Sheet” disclosing all terms, conditions, costs, and fees. Always insist on receiving such documentation directly through the designated submission process, and not merely as a rough outline in an email.
  9. Credit Report Disclosure -Transparency is key: ensure the business loan broker provides access to a free credit report at the time of an offer so you can understand the personal credit they're assessing.
  10. Time to consider offers and Quotes: Respectable business loan brokers typically allow sufficient time, usually at least a week, for you to consider an offer. Beware of brokers who try to rush the submission process or seem overly pushy.
  11. Style and Presentation: Evaluate the broker's communication style and skills. Business loan brokers should be informative and transparent in their approach, employing an easy-to-follow language and avoiding terms like “guarantee”, “no credit check” etc. that could indicate a potential scam.
  12. Deceptive Marketing Practices: Unsolicited cold calls from brokers regarding loans should act as a red flag. Trustworthy brokers often possess alternative means of communication, such as a professional LinkedIn account, or a reliable email address, to establish contact with their clients. Beware of deceptive mail pieces that over-promise or use misleading language.

The Bottom Line: Advice, Tips, and Benefits of Using Small Business Loan Brokers

Whether it’s a Business Loan Broker, Direct Business Lender, or Business Finance Marketplace Platform, there should always be a basic approach to who you want to work with. You should be critical in the following areas of a business loan broker;

  • The broker’s product diversification
  • Product knowledge
  • Flexibility, their commitment to finding the best product to fit your need
  • It’s vital to find a broker that can navigate lender's underwriting criteria on your behalf, saving you time and effort
  • Ask questions about the broker's experience, their compensation, and their ability to assist with completing and submitting loan applications if needed.

As a business owner, consider key questions when seeking a business loan broker.

  • Does their portfolio include diverse financing products?
  • Does the broker have the prowess to guide you to the best product to meet your needs?
  • Are they adept at managing the entire loan process, including origination, funding, and servicing? Are the fees involved justified?

Once you decide who you want to work with, remember that the final decision on the financial product rests with you. Start by identifying why you need the money and how it will contribute to business growth. Evaluate all funding options in the market. Are you getting competitive rates, costs, and terms for your credit profile? Have you analyzed the cost-benefit equilibrium for borrowing? Is the repayment plan crystal clear?

Scrutinize your proposals, term sheets, and agreements with diligence. These offers should include the expense of money (interest rate or factor rate), all fees, term duration, payment frequency, personal or business guarantees, and any collateral requirements. Whether it's for an upfront cost or monthly rent, ensure your finance solution aligns with your business needs without compromise.

How to Apply for a Business Loan Using Advancepoint Capital’s Business Loan Marketplace

Applying for a loan with AdvancePoint Capital is as simple as a 1, 2, 3, 4 process. Start by filling out the online submission form, step forward into the submission process, and wit a matter of minutes, your request is underway. As our way of keeping you updated, you'll receive an email at your specified email address within a few hours confirming your approval. And voila! Your banking requirements have been met and your money gets dispatched to you!

Frequently Asked Questions about Using a Small Business Loan Broker

Where do I find a Small Business Loan Broker?

It is not difficult to find or obtain business funding. A simple google search for “Business Loan Broker,” or a specific product you are looking for like “small business loans,” “Long-Term Business Loans” will do the trick and provide many options. Another option is any recent mail offerings that you may have received and saved.

Should I pay any fees Up-front or separate outside of funding fees to Small Business Loan Brokers?

You DO NOT need to pay for upfront fees to a business loan broker to get most business loan products. Keep in mind business funders and/or business lenders will charge fees that are deducted from proceeds at the time of funding. Always check the terms and conditions of all financing you are considering.

Can I qualify for a Small Business Loan with Small Business Loan Broker if I have bad credit?

Yes, you can get approved for business funding if the business owner’s personal credit is considered bad credit. Be aware the offer will be affected by your credit risk and what can be offered to you.

If I am a Start-up business, can I get a business loan from Small Business Loan Brokers? 

The short answer is Yes and No. It depends if the business loan broker is connected with SBA loan offerings or Private business loan investors. If they are, then yes, they may be able to help you secure a “Start-Up” business loan.

Can I Trust Small Business Loan Brokers with my Personal and Business Information? Is my Data Safe and Secure?

If you do a proper check using the “How to Choose the Best Business Loan Broker” and “Business Loan Brokers or Business Lender: The 11 Warning Signs to look out for when Dealing with a business loan originator,” then you have taken the necessary precautions to consider your data safe and secure. Remember, there are no guarantees, so always use credit monitoring services and take the security steps always to protect your personal data and information.

Does a Small Business Loan Broker Provide any Direct Lending as well?

Some business loan brokers engage in direct business lending. You will need to ask the business loan broker who you are dealing with as the business financing products the broker and which do they direct lend when being presented offers.

Jacques Famy Jr

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