As we started earlier, you can start this kind of business from the comfort of your own home or apartment, and do very well. However, just as soon as you can possibly afford to, it would be your benefit to set up an office with access to general public. Your success and gross income will definitely benefit with an office.
You should set up your operation in a prestige location within or fairly close to the business and financial district in your area. Basically, this will be for impressing your clients, but a the same time, by locating in or near your local loan sources, you'll quickly come to know that important people on a first name basis. Perhaps the best idea would be to sublet space in a suite of offices used by an insurance company, accounting firm, or a group of lawyers. An arrangement can often be made for their receptionist to answer your phone calls and receive your clients. With a little bit of finesse, you might even be able to have one of their secretaries handle your typing and filing.
Your office should be neat and functional, but still impressive. A large desk, comfortable chair and a credenza; perhaps a four-drawer file cabinet also. the image you project is of great importance, and being associated with a big name firm, even if only on the basis of sharing their suite of offices, will definitely be to your advantage in gaining ultimate success.
You should try to cover the walls of your office with your certificates of awards, courses completed, association memberships and seminar courses completed over the years. Documents of affiliation with civic groups or even reproductions of national write-ups should be framed and displayed on your office walls.
Don’t Forget : when planning and furnishing your office, you should also include a least one, preferably two, visitor's chairs. A small sofa would be desirable, but really isn't necessary until you've really firmly established. The thing is, you want to project the impression of affluence and professionalism to anyone coming into your office.
The ideal situation is to have a two-person team--someone on the outside doing the selling, and someone on the inside handling all the processing. If you have the marketing skills, and enjoy selling, you might you for a sharp and impressive appearing person to handle the processing for you. Or if you've got the processing know-how, you might keep your eyes open for a professional appearing person who could be your "outside arm" and do most of the selling for you. Basically, and excepting for the actual preparation and selling of loan packages, most of the inside work can be handled by clerical personnel.
As you grow, however, you'll find it in your best interest to have a full-time secretary. You would train her to field incoming telephone calls, take care of filing, and do your personal typing for you. A typical loan proposal usually requires about eight hours of typing.
Regardless how you get started, and even after you've moved into a suite of plush offices, you'll have to advertise to keep your business coming in. Besides running regular advertising your local newspapers, you should also advertise in the local financial publications as often as you can afford Once you get your business rolling, you should expand your advertising coverage to include such national publications as the Wall Street Journal and the business opportunity publications.
Regarding the type of advertisement to run in these publications, we recommend that you look at money brokerage ads in these publications. Clip out some of those especially like and have your local typesetter make one up for you, using these you've clipped as patterns.
Any ad you run should include or list a minimum loan amount you'll handle, that is, a statement such as "$50,00 minimum to $...." This procedure will screen out the people looking for small personal loans. At the same time, it's a good idea to list a maximum amount you're capable of handling--for instance, "$50,000 minimum to $10,000,000." This will attract those who are looking for large business financing.
In addition to your local newspapers, business publications and national distributed papers, newsletters and magazines, it will be to you advantage to to run an advertisement in the yellow pages of your local telephone book and in area business directories.
Besides"regular" advertising you should be sending out direct mail letters, letting people know that you can help them with their money problems. Some money brokers have a combination letter-display ad made up and printed on the back of postcards. This is quite a bit less expensive than sending out letters, and could possibly downgrade your image somewhat, but on the other hand, those money brokers using postcards say they're very effective because the recipients are more likely to save a postcard than a letter.
A general description of the way the direct mail system works is:
You mail out your letters or postcards to real estate brokers and small businesses in your area. Then a couple of days later, you follow up with a phone call to these people. You identify yourself, ask if the card or letter had been received, and ask how things are going--if perhaps you can be of any help to them, Finally, you ask them to keep you in mind, and to be sure to let you know if something comes up that you can handle.
About one third of the people you talk to will say that they don't immediately need money, but they know of individuals or businesses looking for help. When you do get a referral, be sure to elicit as much information as possible, then make a contact with them.
You can also send out letters in search of lenders or private investors. All of these efforts are helpful in establishing and building your business.
When you have a loan or an investment proposal together,and you intend to sell it to a lender, you should first call the lending officer or the head of that lending organization. If you want to present your package to a private investor, you will more likely have to call his attorney, broker or investment counselor.
The purpose of your telephone call is to set up an appointment in order to present your package in person. Thus, during the course of this telephone call, you should brief the lender on the highlights of your client's loan proposal. If he's interested, he'll probably want you to send him a written summary. After he's received the summary and decided he's interested, he'll get back to you and set up and interview with you, and then you and your client.
You and the borrower should rehearse the entire loan proposal ad have all examples, charts and graphic illustrations ready to form a winning presentation. Any lender willing to listen at all wants to hear the full story, and when they have a question, they want the answer without hesitation. So be sure you're ready when they show up for that loan-selling interview with a COMPLETE presentation.
Once you start processing loan applications, you'll find that about 80 percent of the loans granted to small businesses are made by commercial banks. A few more than ten percent are made by friends or relatives of the borrower, and about three percent by finance companies. Another three percent will be granted by insurance companies. This will give you an idea of possible money sources for your clients.
You must remember, when a prospective borrower tells you how much money he needs, and wants to use it for, it is your job to evaluate his proposal and match his particular proposal with sources, likely to be interested. As you build your list of money sources, you will find those that specialize in specific categories of loans---for apartment buildings, medical facilities, recreation setups, and a myriad of others.
Most money brokers cultivate the savings and loan companies, union pension funds, life insurance trust companies, credit unions, private investor groups, and even the small loan companies. The important thing to remember is that if you're going to bring together people needing money and people with money to lend, you have to continually develop contacts in order to build your list of money sources. It is very helpful to get to know your local bank officials because often times they can refer you to a person you can really serve, because he doesn't qualify for a bank loan.
You will learn also that most sources of VENTURE capital,money for business startups--want an equity share of the business. They generally don't require that the money they put up be repaid, because they're hoping to make their profit from a share of the business as it grows and becomes more and more profitable. They especially like to get in on the "ground floor" of a small companies who plan to issue public shares of stock when they begin to grow.
Still another angle that money brokers should develop is contact with a number of people who might be interested in investing as silent partners in a new or growing business ventures. Silent partners invest in a business without assuming any liability relative to debts the business may incur, while still sharing in the total profits of the business. In most areas of the country, there are always a number of wealthy people around who are interested in investing small amounts of money in any number of business ventures--sometimes as many as they can get in on.
Until you've actually placed a few loans, you're undoubtedly going to occasionally spend a lot of time attempting to sell a loan that just can't be sold. You will have to develop your skill in evaluating from the facts the borrower gives you, the possibility of obtaining a loan for him. Your evaluation will be based upon how much he wants, for how long, and terms (time period and interest rate), his past business experience, and the feasibility of his plan for success in the planned business. While it does take some time and concentration to differentiate the "winners" from the "losers" be aware from the beginning, and you will be less likely to be caught up in efforts to place a loan that just can't be placed.
Of primary importance to your lenders is your client's collateral which would assure repayment of the loan in the event of failure of the business. Lenders won't even listen to, or bother to look at a proposal that is not backed up with realistic collateral to support the loan. And you may count on this: They will call you on ay profit projections based only on the borrower's glowing predictions. These are the things you as a money broker must evaluate before getting too deeply involved. If the loan doesn't have the look of at least an even chance of being approved, better to give it to your client straight. It will save him grief in the long run, and will allow you to go on to another proposal with a better chances of success.
When you go into the matter of collateral with a client, by all means be thorough and inquisitive in working with him. Many borrowers have collateral they have never thought of in terms of security. For instance, antiques, coin or stamp collections, life insurance policies, even a wealthy friend or so who would sign as guarantor(s) of a loan. Remember also any accounts receivable, promissory notes, machinery and equipment, and real estate equity.
When you've listed all the collateral that can be dug up, you have to demonstrate very clearly just how the loan is going to be paid---and particularly if the business fails. Collateral is a necessary part of any loan transaction, but it usually is not enough to satisfy the entire face value of the loan. Thus, in addition to collateral, the borrower has to have a clear and provable plan for repaying the money he borrows.
So long as you work through the commercial banks, you shouldn't need any kind of broker's license. But to be sure, you will want to check with your local licensing authorities. In the end, you'll probably want to get a real estate broker's license, because in many cases, real estate will figure into the loan in one way or another. However, you can get started without one. If you run into an immediate need for a real estate broker's license, you can always make an arrangement with someone who has one and let him be the "licensee of record."
Finally--and possibly the NUMBER ONE requisite for success in your Business Financing Service venture is this: You are going to need, and really must have, enough money available or coming in from some outside source(s), to sustain your daily living for at least the first three months BEFORE you open your business.
It will probably take you two to three weeks to put together each of your first loan proposals. You're working (investing your time) but the money won't be coming in until you finish the job. But even when everything is ready and you begin trying to place a loan, it could take you anywhere from three weeks to three months to get the final approval.
So the best way to get started as a money broker is, as we discussed earlier in this report, to start on a part-time basis while you are still holding down a regular job. Remember, you can work out of your home, do some careful planning and become efficient with your time; concentrate on getting those "retainer fees" and proceed with packaging the loan proposals.
There is no effortless way to start this or any other business. You have to start small, do all or most of the work yourself, and addition to investing your time, you'll have to "prime the pump" with money of your own. However, it can be done, and most assuredly this particular kind of business can take you from pauper to wealth in a short time.
Businesses in every city and town in this country would like to have more money than they are currently have available. You can become rich beyond your wildest dreams by helping them. You identify those with money needs and bring them together with the people or organizations with money to invest.
All it takes is the know-how we've passed along within this business start-up manual, and ACTION on your part--it's up to you!
