What does a Commercial Loan Broker do?
A commercial loan broker works with corporations and companies to help those companies find the loans they need to expand their business or purchase items necessary to do business. A commercial loan broker is in many ways similar to a residential mortgage broker, except he helps businesses obtain all different sorts of loans. The broker may be an independent broker and have relationships with several lenders or he may work for only one lending institution.
Businesses need loans for a number of reasons. A business may need a loan to finance equipment or to make large purchases necessary for its operations. Some businesses need loans to buy land, and others need it to purchase shares in or acquire a new business subsidiary. Since there are many types of businesses and many different ways in which those businesses operate, there are also many reasons why a business may need to borrow a sum of money.
Just as when a person borrows money, a business is able to gain credit on the basis of several factors. Generally, the credit rating or score of the business is looked at by lenders. Businesses have credit ratings determined by several institutions, including Standard & Poor's, Moodys and Experian Business. The business' capital and assets may also be a factor in whether a business can obtain credit and how much.
A business seeking to borrow money will shop around for the loan, just as individuals do. Businesses are looking for someone who will extend them credit given their credit rating and looking for a loan at the lowest interest rate and with the most advantageous terms possible. A commercial loan broker helps them in this process.
The commercial loan broker will evaluate the credit and loan application of a business. He then will determine how to best match that business to a loan and to a lender. The commercial loan broker may work independently, which means he will have relationships with several different lenders. In such cases, the broker may determine which lender or lenders is the best fit and will then approach those lenders with the business' application, shopping the loan around and looking for the best deal for his corporate client. In other cases, the loan broker may work for one independent lending institution, in which case he will help evaluate the business' application for a loan and help the business find the best offering from that particular lender that will meet its needs.
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