Business Loan Brokers: directory of firms

A packager collects the same core file every time: two or three years of business and personal tax returns, interim financial statements, a debt schedule, recent business bank statements, and for an SBA deal a personal financial statement and history for everyone owning twenty percent or more. A broker who asks for nothing but three months of bank statements is shopping you to cash advance funders, whatever they call the product.

The file then goes out. Ask to be told which lenders it went to and when, because a scattergun submission can produce several hard credit pulls and a pile of unsolicited calls. If an SBA loan results, the lender completes SBA Form 159 and it is signed by the lender, the applicant and the agent, one form per agent, disclosing the compensation.

SBA regulations require any applicant, agent or packager to execute and provide the SBA a compensation agreement governing what is charged for services rendered on a matter involving SBA assistance. The agency supplies the form. An agent here means a loan packager, referral agent, broker, accountant, attorney or consultant who helped complete the application.

The agreement must also provide that where the SBA deems the compensation unreasonable, the agent reduces the charge, refunds the excess to the applicant, and stops collecting more than the SBA considers reasonable, directly or indirectly. That is real leverage, and it exists only on SBA files. Ask for a copy of the signed form for your own records.

Start with the bank or credit union that already holds your operating account. It sees your deposits, it may already have collateral, and its pricing is usually the floor the rest of the market has to beat. The SBA is equally direct that on a 7(a) loan you work with the lender, not with the agency.

The SBA also runs Lender Match, a free tool that connects a business to SBA-approved lenders. Trying it costs an email address. A broker becomes worth paying when you have been declined, when the story needs telling — a bad year, an acquisition, a partner buyout — or when you need several lenders competing on price at the same time rather than one relationship dictating it.

California enacted commercial financing disclosure rules that took effect on 9 December 2022. Providers must tell a small business the amount of funds provided, the total dollar cost of the financing, the term, the payment amount and frequency, prepayment terms and an annual percentage rate. The rules reach installment loans, open-end credit, factoring and merchant cash advances alike.

New York requires standardised disclosures on commercial financing of up to 2,500,000 US dollars, with prescribed formats for sales-based financing, closed-end and open-end credit, factoring, leases and asset-based lending, and calculations for the finance charge and the annual percentage rate. If your business is in one of these states and a funder cannot produce the disclosure, that is a straightforward reason to walk.