If you’re a Florida business owner entering the commercial lending market, you might be overwhelmed by the sheer volume of lenders and the number of business loans available. Let’s face it — combing through different lending products and finding the right lender can be exasperating.
Fortunately, a little help from commercial loan brokers can make the process easier. They act as a go-between for borrowers to help them find the right loan products and providers for their business needs.
Keep reading to learn how to find a commercial loan broker and how they can help your Florida business discover the right financing options.
When Should You Use a Commercial Loan Broker?
If you’re an entrepreneur, you wear many hats to keep your business growing. You probably have a to-do list as long as your arm. So if you’re not excited about the idea of researching business loans and lenders, it’s probably best to get some help from a commercial loan broker.
Don’t forget, looking for the right lender and deciding on the type of loan you need is only the first step — submitting applications is another story. You might have to spend significant time submitting applications to several lenders before getting approved for the amount you need.
A commercial loan broker can help you with the following tasks:
- Finding the right lender and loan depending on your business needs
- Connecting you to a network of loan providers
- Understanding the terms of your loans
- Getting the best rates and terms possible
Brokers can do all this because they’re familiar with the commercial lending industry. They’ve also established a relationship with lenders. In addition, loan advisors often have access to information that might not be listed on the lender’s website. This means you have a better chance of getting approved for a loan than you would if you had applied on your own.
Working with a loan broker is a great idea if you’re in a less-than-ideal situation, such as if you’re a new business or have poor credit. Commercial loan brokers can help you find the best financing options with eligibility criteria you can meet.
Types of Commercial Loan Brokers to Consider
There are many types of commercial loans in the market. As in other occupations, loan brokers have specializations. They usually focus on one or two specific types of loans.
Here are some types of commercial brokers you may encounter:
Commercial mortgage brokers: Also referred to as commercial real estate brokers, commercial mortgage brokers help businesses and investors finance commercial properties. A good broker can help you navigate SBA-backed real estate loans, get investment property loans, and refinance commercial mortgage loans. They can also help you obtain bridge loans when necessary. These are the brokers you’d consider for multifamily and apartment buildings, office buildings, mixed-use, self-storage, and other commercial property types.
Traditional commercial loan brokers: Conventional loan brokers can help you with loan programs and lines of credit offered by traditional banks, credit unions, and the like. They’ve forged a good relationship with major banks. Conventional loan brokers also have a good understanding of each bank’s lending criteria and other aspects of that side of the industry.
Alternative business loan brokers: This type of commercial loan broker deals with online lenders as opposed to traditional financial institutions like banks. Many business owners with good credit and strong cash flow can’t get loans from banks because they don’t meet certain criteria. Businesses turn to alternative loan brokers to get funding for working capital loans, inventory financing, or equipment loans from online lenders.
SBA loan brokers: This type of commercial loan broker is a pro in navigating the SBA funding process. SBA loans are backed by the Small Business Administration (SBA), which means if a borrower defaults on a loan, the SBA pays the lender the guaranteed portion. Funding for SBA loans comes from banks, community lenders, credit unions, and nonprofit lenders.
Franchise loan brokers: A franchise loan broker understands the complicated process of obtaining financing to enter a franchise agreement. Buying a franchise could include needing a mortgage for commercial property and funding for working capital. So, franchise loan brokers need to be adept at how to acquire both to help borrowers start and run a franchise.
Commercial loan brokers can help with financing options such as the following:
Equipment loans: If you need to buy equipment and machinery for your business, but you lack capital and can’t get approved for traditional loans, equipment financing is an excellent option. You don’t have to put up collateral because the machinery secures the loan. This lowers the risk for the lender.
Merchant cash advances: A merchant cash advance (MCA) is an alternative financing option where business owners receive cash in exchange for a percentage of their future sales. Lenders look at your credit history and past revenue. Then you negotiate a loan amount and a percentage you’ll pay daily or weekly until you pay back the debt in full.
Invoice factoring: Invoice financing is a type of loan that allows businesses to sell their accounts receivable to factoring companies. The borrower receives cash upfront in exchange for their unpaid invoices. The lender then gets paid when they collect from customers as the invoices come due.
How to Find the Best Commercial Loan Broker in Florida
The Sunshine State — with its flourishing tourism industry and no personal income tax policy — is an excellent place to start and grow a business. Whether you’re planning to join a thriving industry or trying a unique venture in Miami, Tampa, Jacksonville, Fort Lauderdale, or anywhere else in the state, you’ll need capital.
It’s always a good idea to apply to your bank for a business loan first. But if you need a large amount, a loan broker could help you get it.
Ask other business owners to point you toward trustworthy brokers they’ve worked with. You can also find recommendations from your local business development center. If you’re going to search with Google, make sure you read reviews and look up the broker’s rating from sites like Better Business Bureau (BBB) or Trustpilot.
Here are a few considerations to help you decide who to work with:
- Make sure they have an easy and streamlined loan process.
- Check the number of lenders they’ve partnered with.
- Ask about their process in helping you determine the right lender.
- Ask how they can help you choose the right loan options.
- Ask how fast the funding process is.
Things to Watch out for When Choosing a Commercial Loan Broker
When you’re looking to get funding for your business, you probably needed the money yesterday. Since it’s your name and business on the line, though, make sure you’re working with legitimate loan brokers.
Here are a few warning signs to watch out for in a broker:
They ask for upfront payment for their services. Lenders typically pay brokers a finder’s fee or commission, so it’s a shady practice to ask for payment from both parties. Also, if you need to pay, you should do it after they’ve delivered the service.
They’re difficult to reach and only offer one method of contact. Be wary of brokers who can only be reached through email and don’t have any other contact details or addresses. They might just be after your sensitive personal information.
They have poor reviews. If the majority of a broker’s reviews are negative, save yourself the hassle and find a different broker.
They only work with one lender. If a broker sends all their clients to one lender, they might just be a sales representative. This defeats the purpose of working with a broker, which is for you to have access to a wider range of lenders.
What Information Is Included in a Florida Commercial Loan Application?
Commercial loan applications ask you to disclose personal and business information. They do this to determine your creditworthiness and ability to pay back the loan. You’ll need to provide supporting documents as well. Keep the following handy:
- Legal identification documents, such as a driver’s license, passport, federal tax ID, or employee identification number (EIN)
- Bank statements
- Financial statements, such as balance sheets, cash flow statements, or profit and loss (P&L) statements
- Personal or business credit score
- Time in business
- Annual or monthly revenue
Florida Commercial Loan FAQs
In this section we’ll discuss the main aspects of commercial loans, such as interest rates, credit scores, and loan terms.
What Is a Good Interest Rate on a Commercial Loan?
A good interest rate on a business loan is the rate you can afford. Interest rates have risen dramatically since 2022. However, SBA loans generally have the lowest rates, so you can use them to gauge where you’re at.
- SBA 7(a) (variable rates): 7%–9.5%
- SBA 7(a) (fixed rates): 9.75%–12.75%
- SBA Express: 9.25%–11.25%
- SBA Microloan : 6%–9%
- SBA Economic Injury Disaster Loan (EIDL): 2.75%–3.75%
In addition, the interest rate you’re going to get depends on the lender, your qualifications, the industry you’re in, and the type of loan you apply for.
What Is the Minimum Credit Score for a Commercial Loan?
The minimum credit score required to qualify for commercial loans depends on the lender. Some banks ask for a minimum credit score as high as 680.
At Clarify Capital, though, we serve business owners with all types of credit. That’s why we recommend a credit score of at least 550. If your credit history is less-than-stellar, give us a call to discuss your options.
What Is the Average Length of a Commercial Loan?
The average length of a commercial loan depends on the type of loan you receive. For instance, the range for short-term loans is around three months to two years. On the other hand, you can get long-term SBA loans with 25-year terms.
Secure Business Loans and Financing With Clarify Capital
Whether you’re looking for commercial real estate loans in Orlando or a short-term working capital loan for your business in Palm Beach, Clarify Capital is here to help you get the funding you need for your Florida business.
The application process is quick and easy, and you’ll be given a dedicated advisor to help you choose the loan best suited to your needs. Call us today to discuss your options.