Still another angle that money brokers should develop is contact with a number of people who might be interested in investing as silent partners in new or growing business ventures. Silent partners invest in a business without assuming any liability relative to debts the business may incur, while still sharing in the total profits of the business. In most areas of the country, there are always a number of wealthy people around who are interested in investing small amounts of money in any number of business ventures - sometimes as many as they can get in on.
Until you've actually placed a few loans, you're undoubtedly going to occasionally spend a lot of time attempting to sell a loan that just can't be sold. You will have to develop your skill in evaluating from the facts your borrower gives you, the possibility of obtaining a loan for him.
Your evaluation will be based upon how much he wants, for how long, and terms (time period and interest rate), his past business experience, and the feasibility of his plan for success in the planned business. While it does take some time and concentration to differentiate the "winners" from the "losers," be aware from the beginning, and you will be less likely to be caught up in efforts to place a loan that just can't be placed.
Of primary importance to your lenders is your client's collateral, which would assure repayment of the loan in the event of failure of the business. Lenders won't even listen to, or bother to look at a proposal that is not backed up with realistic collateral to support the loan. And you may count on this: They will call you on any profit projections based only on your borrower's glowing predictions.
These are the things you as a money broker must evaluate before getting too deeply involved. If the loan doesn't have the look of at least an even chance of being approved, better to give it to your client straight. It will save him grief in the long run, and will allow you to go on to another proposal with better chances of success.
When you go into the matter of collateral with a client, by all means be thorough and inquisitive in working with him. Many borrowers have collateral they have never thought of in terms of security. For instance, antiques, coin or stamp collections, life insurance policies, even a wealthy friend or so who would sign as guarantor(s) of a loan, remember also any accounts receivable, promissory notes, machinery and equipment, and any real estate equity.
When you've listed all the collateral that can be dug up, you have to demonstrate very clearly just how the loan is going to be repaid - and particularly if the business fails. Collateral is a necessary part of any loan transaction, but it usually is not enough to satisfy the entire face value of the loan. Thus, in addition to collateral, the borrower has to have a clear and provable plan for repaying the money he borrows.
So long as you work through the commercial banks, you shouldn't need any kind of broker's license. But to be sure, you will want to check with your local licensing authorities. In the end, you'll probably want to get a real estate broker's license, because in many cases, real estate will figure into the loan in one way or another. However, you can get started without one. If you run into an immediate need for a real estate broker's license, you can always make an arrangement with someone who has one and let him be the "licence of record."