In today’s market, small, fast moving businesses can disrupt major market leaders with new technologies and innovative thinking. With the speed and size of these opportunities, many people are looking for ways to become a part of the lucrative financing process. And one of the greatest opportunities today is to own your own finance company.

But how can business owners start or expand into owning their own finance company without direct access to cash? The answer is in a crucial sector of the industry: the loan broker. This is the person who works between the lender and the borrower, helping the borrower to position their ask and helping lenders match with businesses that offer the right balance of risk and reward.

If buying out an existing loan broker business doesn’t sound right for you, but starting one from scratch sounds intimidating, you could be suited for loan broker franchise ownership. Often, a commercial finance franchise is considered a “turnkey” operation, an opportunity to own your own finance company, but without the risk inherent in starting from scratch. But just what is a commercial lending franchise and how do you know if you’re cut out to be a franchisee?

Loan Broker Franchise Opportunities

Essentially, a franchisee (you) pays an initial fee and ongoing royalties to a franchisor. In return, the franchisee gains the use of a trademark, ongoing support from the franchisor, and the right to use the franchisor’s system of doing business and sell its loan services. When evaluating loan broker franchise opportunities, there are several things you want to consider before committing to a purchase.

Before jumping into those, it is important to highlight that in most commercial lending franchises and commercial loan broker franchises, the loan broker doesn’t loan any of their personal money. Lenders are highly regulated and they must have access to the cash to lend. Most loan brokers don’t start out with millions or billions in their personal bank account to lend! Through the lending networks that are part of their commercial loan broker franchise program, they can help clients access greater than $2 billion in funds ready to lend.

In other words, there are commercial lenders with funds they are ready to lend. The loan broker franchise opportunities provide franchisees with access to these lenders. The franchisees then assist small and medium sized businesses in accessing these funds, helping them to make good borrowing decisions. They help match lenders with experience in a specific type of business with borrowers in that industry that are ready to take the next step in their growth and expansion.

How to Choose a Commercial Lending Franchise

Once you’ve decided a franchise is the right route for you, how do you choose the right one? Start by investigating different commercial lending franchises which have the highest growth potential. Narrow the choices to a few companies you’re most interested in, then analyze your geographic area to see if there’s a market for that type of business. Loan broker franchise opportunities are dependent on your local market for borrowers and the types of loans your franchise is set up to provide.

Of course, you also need to do your own detective work. Start by going online to look up the company’s website, and read through any magazine and newspaper articles you can find about the company you’re considering. Is the company depicted favorably? Does it seem to be well managed and growing? What kinds of reviews are left by people who have owned a business as part of the franchise family?

Each of the loan broker franchise opportunities on the market offer training and support, but it is important to evaluate who is providing the training and what kind of background they have.

Is the loan broker franchise created by a lender that wants to protect their interests at all costs? This could be a detriment to your business if your role is to simply screen out applicants. A loan broker should be independent and work on behalf of both the lender and the borrower to make sound deals, not to be beholden to one party in the agreement.

Do the trainers and coaches have in-field experience? Have they been on the front lines of closing deals, or are their interests merely academic? Some commercial finance broker franchise programs outsource their training and support to independent faculty and trainers. If all you are getting is by-the-books training, it may not inform your decisions when working on complicated deals.

Does the franchise have a clause requiring you to pay for upgrades to your office space if and when they conduct a rebrand? Some franchises require a split on design fees to complete upgrades and to meet design standards specified by the corporate headquarters.

Once you’ve decided on a certain franchise through your preliminary research, you need to find out if this opportunity is as good as it sounds. Your next step is to analyze it thoroughly to determine whether it’s really worth buying.

Don’t be shy about asking for the required materials from the commercial finance franchise company. After all, they’ll be checking you out just as completely. If they aren’t, that should sound a warning bell. Another warning sign is if the franchisor asks you to sign a disclaimer stating you haven’t relied on any representations not contained in the written agreement. Such a requirement could indicate the franchisor doesn’t want to be held responsible for claims made by its sales representatives.

Own Your Own Finance Company: Franchise Benefits

In addition to a well-known, already established brand, commercial loan broker franchise opportunities offer other advantages that aren’t available to entrepreneurs starting their new business from scratch. Maybe the most significant is that when you own your own finance company in this manner you get a proven system of operation. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error.

Reputable commercial lending franchisors have been in business for some time and have done their fair share of marketing while also having large referral and lender networks available to you, so you’ll feel a greater sense of confidence that there’s a demand service. The franchisor can also provide you a clear picture of the competition and how to differentiate yourself from them.

Finally, with everything basically done for you, you will have the potential to grow quickly. Your time and money won’t be wasted on building a brand, marketing, creating a system or creating your own network of COIs, lenders, or referrals. Those things will already be available to you as part of your commercial finance broker franchise, so you can focus on closing deals.

Are There Other Types of Commercial Finance Franchise?

There are many ways to own your own finance company. Commercial finance is a broad category, and there are many commercial finance franchise opportunities. Consulting organizations often including accounting and advisory services, helping business owners decide if they are over leveraged, understand risk in the market, evaluate trends and financial forecasting based on the market. But many organizations in this category do not directly help businesses source funding. They are more strategic than tactical.

A commercial loan broker franchise, in contrast, will primarily focus on assisting businesses select funding types, identifying and targeting lenders and applying for loans. The loan broker franchisee makes their money from a percentage of closed deals, not from any consulting fee. A commercial finance franchise focused on consulting will assume much greater liability than a commercial loan broker franchise because the latter limits their consulting role to advising the client on loan types and accurately representing their business to lenders. That’s why, when it comes to commercial finance, we recommend a commercial loan broker franchise over a consultancy.

What Do You Have to Lose With a Commercial Finance Franchise?

Although buying a franchise seems like a turnkey business plan, the “hole in one” if we are to use golf as a metaphor, it has one crucial downfall – you are required to give some of your hard earned profits to the franchisor. The franchisee (you) are responsible for paying these fees each year regardless of your gross income or total sales.

On the flip-side, starting a loan broker business from scratch may require more trial and error on your part, but you get to reap 100% of the profits of your hard work.

So are there other options between buying an existing business, becoming a franchisee and starting from scratch?

How to Own Your Own Finance Company Without Franchise Fees

The Commercial Loan Broker Institute is a business opportunity that is better than a franchise because you own your business outright and don’t need to pay any ongoing royalties or franchise fees. It comes with the benefits of a loan broker franchise opportunity. It includes done for you branding and marketing, a full toolbox of resources and contracts, from sales scripts, contract documents and presentation slides, comprehensive commercial loan broker training, a network of lenders equivalent to any commercial lending franchise without any restrictions as you expand your personally-developed lender network, and ongoing coaching and development that provides you assistance through the CLBI loan broker network.

Gain the benefits of becoming commercial finance broker without the franchise!

With the comprehensive CLBI support system in place, but no requirements or restrictions, CLBI allows graduates to extend beyond the scope of other loan broker franchise opportunities on the market. You can develop your own network to seek referrals, discover new lenders, identify a niche and shape your brand to serve a targeted audience, and expand your opportunities beyond commercial lending without any requirements from a central headquarters.

The Commercial Loan Broker Network supports our students and graduates from the very beginning. From marketing your business to networking, assessing the client’s books and on to closing deals, CLBI covers the skills you need to get your feet under you for a solid launch.

Start a conversation with CLBI and see if our independent, owner operated model can serve you better than any commercial finance broker franchise on today’s market.