As a loan or credit card broker, you can make serious income if you start and manage your business properly and according to local and national regulations. In this electronic climate, you can be successful working from home without a brick-and-mortar business address. The key factor is to become as knowledgeable and professional as the competition, most of which have physical business addresses. Borrowers and lenders must hear, see and feel your professionalism through your phone, website and production.
Build a solid knowledge base regarding loans and credit cards. Learn how they work, how to qualify an applicant, basic language and terms, and risks attached to them. Applicants want to receive the correct advice, fast decisions (approved or rejected), simple document requirements, and quick access to cash or credit lines.
Learn the state and federal regulations that apply to loan and credit card brokers. While most states require formal licensing for all mortgage brokers, some have lesser or no license regulations for loan brokers. Also investigate the laws of other states should you wish to function in other geographical areas. When licensing is needed, learn the requirements and paperwork necessary to receive legal permission to operate.
Create a working home office. This business does not lend itself to a "dining room table" set-up. There should be an effective and separate office in your home. Lending activities always involve confidential information that must be secured and managed. Separate phone lines, lockable file cabinets and a secure computer area are important for broker and applicant protection. Install storage for letterhead, envelopes, business cards, brochures, loan applications and other required documents for your products.
Decide whether to create a corporation, limited liability company (LLC) or sole proprietorship. Open at least one bank account in the name of your company. Don't commingle business with personal funds. Extra insurance, if any, may depend on the type of business organisation chosen. Always get professional advice regarding these important considerations. Understand that broking loans and lines of credit (plastic cards) can involve more liability than some other businesses.
Find lenders, banks or private companies that seek and accept loan broker referrals. Evaluate the quality of products offered (e.g., approval requirements, rates and terms, acceptability of loans and/or credit cards, and reliability of timely broker payment of fees). For example, lenders offering loans requiring stellar credit scores but with high interest rates will typically be rejected by borrowers. All terms must be reasonable to the borrowing public.
Market your business professionally. Design an interactive website to attract prospective borrowers. Your "Contact Us" form should be brief, requiring just the potential borrower's name, e-mail address, phone number and short statement of what he's looking for. The required application information can be obtained via a hard copy, an e-mail or an in-person meeting after a prospect becomes a client. Be thorough and understand the specific application requirements of all lenders doing business with the brokerage.
Spend the time and money to start your business correctly from the beginning. Concentrate on professionalism with lenders and borrowers, as some brokers encounter roadblocks in establishing credibility. Develop working relationships with local attorneys and accountants, as they are a wonderful source of referral business.
Don't take shortcuts in establishing arrangements with lenders or borrowers. Getting deals from concept to loan closing are critical to earning high fees. Don't try to fit square pegs into round holes: Some borrowers simply won't qualify for the loans and credit cards offered. Don't waste their time, the lender's time or broker time on deals that just don't fit.