Indeed, you'll become more efficient with each experience with a client. You'll soon recognize which proposals to concentrate your attention on, and of course, which ones to scan briefly and hand back to a loan seeker. The more you deal with money professionals, too, the sharper you'll become - and consequently, the more money you will make.
Money professionals know what types of loans are possible or likely from each of their different funding sources; thus, they'll present only those having the best chances of success. You will quickly become well versed in the current lending and investment trends, and acquainted with the lending rates and requirements of your loan sources. As you review, assist and put together each of the request-for-money proposals, your knowledge will improve your ability to package specific requests, and to 'sell' a loan proposal. Just keep in mind that every time a loan is approved, or when one of your sources decides to invest in a client's business, you'll be taking a financial cut right off the top.
Right here I'd like to assure that you don't have to be either a financial genius or a super sales person. All you really have to know is how to put together a proposal properly, and acquire a list of sources interested in lending money or investing in a venture to obtain a profit.
You'll find that most of the borrowers you sign to assist in finding money for are unaware that they will have very little if anything to say about the terms of the loan that may be finally granted. You'll find that most of them are already convinced that they have the ultimate idea for a business that will make everyone involved rich. Almost all of them are trying to get started with little or no money of their own, and they'll think that whatever the prevailing interest rate, it's too much.
Your first chore will be to screen these people. Explain the facts of life to them, and don't waste your time with them if you have the feeling they'll reject or refuse to accept a loan you line up for them because of interest rates. If they've been to most of the regular loan sources in your area, they'll know that when they want or need money, it's the lender who dictates the terms of the loan. A prospective borrower soon learns the prime rate that is published is almost never used. Actually, the prevailing prime rate plus two percent is generally a good rate of interest for most small businesses. In most cases, such loans have to be well secured with collateral not associated with the business.
Most of your would-be borrowers will not qualify for the prime plus two percent rate. Business experience, coupled with the type of business involved, will almost always put them in the "high risk" loan category. After you have your retainer fee, you have to educate your would-be borrowers in this regard. For those who cannot face the facts of life about interest rates, you have to just forget.
Something else you'll have to convince your clients of: If he says he'll give up a share of his business in exchange for the use of your investor's money, he'll have to give up a very large share. Most small business investment corporations or private investors will want at least 25 percent, and more often than not, up to 49 percent. In some cases, where a half million dollars or more is provided by the investor, he may (reasonably) ask for as much as 70 to 80 percent. Thus it's absolutely essential that you learn to qualify your would-be borrower before you get too deeply involved or waste too much of your time.
For those who can't or don't want to pay your retainer fee - I say skip them. And those who can't or don't want to pay the high risk interest rates when you let them in on the real facts of life - forget them too. And those that have been turned down by practically every lending institution in the country, I would advise you - let some beginner gain practice on them. And these are the ones you need to learn to spot while you are a beginner.
When someone calls in response to your 'Money Available' advertisement, who ever is acting as your secretary should get the name of the caller, the name of the business, the telephone number, amount of money needed, kind of business, and most appropriate time for a consultation. This can be handled most efficiently with pre-printed telephone message pads. So you simply collect information from all these incoming calls, look at it all over and start making your call-backs.
Basically, your call-back conversation should sound something like this: "Hello, John Jones? This is Mr. Money Broker returning your call about money for business financing. I understand that you're looking for about $100,000 in order to set up an auto tune-up shop. You stated that you are already pretty well organized with a business plan and location, and that you feel you have pretty good collateral. That's very good. Before we talk any further, however, I'd like to tell you a little about our company".
"We represent a number of large lending organizations for business financing, as well as a number of private investors who are looking for new ideas and businesses to invest in. Their primary requirement, of course, is that they be assured of getting their money back, but further that they will make money from such an investment".
"What I do is work with you in preparing your loan or investment package so that it will be attractive when it is presented to prospective lenders. It is very important that your proposal be complete and in the proper order. It is also of the greatest importance that it 'looks good', and 'sell' the people it is taken to. The prospective lender must feel confident in granting you a loan or investing in your business. Once we've got your presentation together, I then take it to some of my lending or investment sources and work toward obtaining you the money you need.
"As I'm sure you're already aware, it's most important that your proposal be prepared properly, and presented to the people who are in a position to give you the money you're asking for. I work with you to see that your proposal is the best my people have ever seen, and then I take it to the people who have the money and are looking for a good investment. For this, I require a $100 broker's retainer fee. I then go to work on your specific money needs. What we need to do now is set up a time and date for me to meet with you so that I may review your proposal. Would tomorrow morning at 10:00 be all right with you, or would 11:00 be better?"
The important thing is to be in control of this telephone conversation; to tell the prospect only what you want him to think about; and to sell him on the idea of getting on with it by paying the broker's retainer fee of $100. Only after you have collected that, of course, will you start to work on evaluating his plan and getting him the money he needs.
When you go to see your prospect, you'll need to have a printed "broker's agreement" ready for him to sign at the time he pays the retainer fee. An example of a basic or simple broker's agreement is shown here.
Feel free to use the following form as a pattern for your own agreement, or you may even want to cut it out, paste it up, and have your printer run off a supply for you. If you do cut out and use the form, you will of course place your business name, address and telephone number in the space "Your Name and Address" at the top. Also, be sure to block out the instructions on the signature lines.
Your name and address
Agreement for financial service
The undersigned, __(Borrower's Name)__ , hereby appoints __(Your Name)__ as his Agent, and authorized him to submit to lenders financial data and information supplied by the borrower for the purpose of the lender making a loan or investment direct to the undersigned. The undersigned agrees to pay to __(Your Name)__ a fee of _____% of the amount of the loan or investment obtained. The undersigned hereby pays to __ (Your Name) __ $_________ as a non-returnable fee for time involved in appraising feasibility of the loan requested. This fee is separate from any other fees due if loan is obtained.
Once you are organized and rolling, you'll find that most of your day-to-day in come will be derived from the packaging of loan applications. Once your client has signed the broker's agreement and given you his check for the retainer fee, you'll be helping him to get his loan or investment proposal together. This is the first thing to do, and you have to do this regardless of any forms your client has already filled our, or anything he may have done relative to a loan proposal.
First give your client a detailed list of information he'll need to have within his loan or investment package. Because requirements do change from time to time, you will want to give your client the most up-to-date requirements in this regard. Go to several of the banks in your area and ask their loan officers for a copy of their loan application forms. Use these forms as your guide in making up the detailed list of requirements you will use in working with your client. If you need additional assistance, write one of the several organizations listed at the end of this report.
When you have the package put together and ready for presentation to a lender, take it back to your client and brief him on how to present it to prospective lenders, and generally you would give him the names and addresses of the people you feel will be most likely to listen to his presentation. He makes the presentation to the local prospects, and contacts your other possible sources by mail. If he needs further help from you, you would charge him a per-hour counselling fee, plus consulting charge for any special or extra time spent working with him.
Overall, you should position yourself and your service to the client in order to collect a "finder's fee" of 1/2% to 10% of the amount of money actually loaned to or invested in his business. A flat fee of $100 to $250 as a broker's retainer fee for helping him with his loan presentation when he does most of the work - an outright fee of 1% for the total preparation of his presentation package - and a consultant's fee of $50 to $100 per hour for any additional time expended on the project. These are your "bread butter" services that will establish you as a professional, and keep you in business until you score with a big commission from perhaps a million dollar loan. You have to involve yourself in these services, because they'll make the difference between your going broke or really succeeding in the money brokering industry.
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