How to become a commercial loan broker

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Working as a Commercial Mortgage Broker

There is more than meets the eye when it comes to being a commercial mortgage broker. For example, did you know that they make an average of $63.07 an hour? That’s $131,181 a year!

Between 2018 and 2028, the career is expected to grow 8% and produce 24,300 job opportunities across the U.S.

What Does a Commercial Mortgage Broker Do

There are certain skills that many commercial mortgage brokers have in order to accomplish their responsibilities. By taking a look through resumes, we were able to narrow down the most common skills for a person in this position. We discovered that a lot of resumes listed detail oriented, initiative and interpersonal skills.

When it comes to the most important skills required to be a commercial mortgage broker, we found that a lot of resumes listed 19.3% of commercial mortgage brokers included real estate, while 17.0% of resumes included loan portfolio, and 8.1% of resumes included buyers. Hard skills like these are helpful to have when it comes to performing essential job responsibilities.

How To Become a Commercial Mortgage Broker

If you’re interested in becoming a commercial mortgage broker, one of the first things to consider is how much education you need. We’ve determined that 57.3% of commercial mortgage brokers have a bachelor’s degree. In terms of higher education levels, we found that 13.4% of commercial mortgage brokers have master’s degrees. Even though most commercial mortgage brokers have a college degree, it’s possible to become one with only a high school degree or GED.

Choosing the right major is always an important step when researching how to become a commercial mortgage broker. When we researched the most common majors for a commercial mortgage broker, we found that they most commonly earn bachelor’s degree degrees or master’s degree degrees. Other degrees that we often see on commercial mortgage broker resumes include associate degree degrees or high school diploma degrees.

You may find that experience in other jobs will help you become a commercial mortgage broker. In fact, many commercial mortgage broker jobs require experience in a role such as vice president. Meanwhile, many commercial mortgage brokers also have previous career experience in roles such as loan officer or broker.

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How to become a commercial loan broker

Are you a residential mortgage broker considering commercial lending? Adding commercial real estate loans to your product offering can be a great way to create more opportunities for closings each month.

Like any new project, however, getting a good start is vital to your long-term success. That said, what does it take to be a commercial mortgage broker? Where will you source leads? Who will fund your deals?

Let’s take a look at some of the keys to the puzzle:

1. What Skills Do I Need?

It may come as no surprise that many of the skills you are already using as a residential mortgage broker are the same needed when you make the transition into the commercial space.

You still need to have marketing and prospecting prowess. You’ll need to have a keen awareness of your audience and the insights to effectively market to them. You’ll need qualifying and negotiation skills. And, you certainly will still need a heightened sense of organization and detail.

The good news is that you won’t be starting from scratch – you can simply build on what you already know from your experience.

2. Do I Need to be Licensed to Close Commercial Loans?

Since all residential mortgage originators need to be licensed before they can do business in their state, many assume they will need to obtain a license to close commercial loans as well. But that isn’t always the case.

The truth is it isn’t always clear if a state requires a license in order to broker commercial loans, so we encourage brokers to either consult with their attorney or search the NMLS online database to determine whether or not a license is required to broker commercial loans in those states where they do business.

3. What Types of Properties are Common in Commercial Lending?

While residential homes can all appear quite similar within a particular neighborhood, each commercial property located along a single block can be completely different. Office buildings, restaurants, and retail centers have little in common, yet they all qualify as standard commercial properties.

You may find it easiest to focus initially on multifamily commercial properties. That’s because one of the main differences between commercial and residential multifamily properties lies in the number of units. In many states, an apartment building with 5 or more units qualifies as commercial, while multifamily properties with 4 or fewer units are considered residential for borrowing and tax purposes.

Once you get more familiar with commercial lending, you may wish to start expanding your business to cover other common commercial real estate, like warehouse, light industrial, automotive, bar/restaurant, and self-storage properties.

4. Where Will I Source Leads?

As a residential mortgage broker, you already have access to a wealth of clients who may have a need for commercial loans that previously would have had to look elsewhere for funding options. This is perhaps the greatest source of leads for brokers adding commercial lending to their offerings.

However, for both residential and commercial mortgage brokers, a strong network is the key to a successful business. Here are a few quick tips for growing your network:

  • Partner with the right lender — By working with the right lenders, you’ll be able to offer attractive funding choices to your current and potential clients, which can help grow your network. You’ll know you’ve found the right team when they’re doing everything they can to support your clients’ needs.
  • Participate in industry events — As you likely do on the residential side, to expand your network for commercial loans, you’ll want to participate in industry events and business-related events in your community.
  • Utilize social media — In 2019, not having a social media presence can certainly hinder your ability to network effectively. You can expand your network online by sharing valuable information with your sphere. Your focus online should be to stand out as the “lending expert” that potential clients think of when they think of commercial loans.

5. How Will I Qualify Commercial Scenarios?

The ability to analyze commercial scenarios and quickly determine the optimum lending solution is key for commercial originators. You won’t develop this skill overnight, but it’s one you must work toward if you want to consistently close commercial deals.

For now, try to keep the following steps in mind when a commercial mortgage scenario reaches your desk. That way, you’ll begin to develop an internal checklist that allows you to save time and increase the chances of approval for your clients.

  1. Identify the borrower’s FICO score and credit history
  2. Learn as much as you can about the commercial property in question
  3. Look beyond the property itself and learn about its location
  4. Determine the borrower/guarantor’s ownership structure
  5. Work with your client to arrive at a primary purpose or motivation for the loan request

Bonus – Who Will Fund My Deals?

Our team at Silver Hill Funding has helped thousands of residential brokers find success in the commercial mortgage space. We have the tools and the experience needed to help jumpstart your commercial mortgage business. What’s more, we offer all of the education material and customizable collateral you need to get started with ease.

To learn more and to take the first step, be sure to sign up for our free educational course. In just 30 days, you’ll have all the tools you need to start originating commercial loans.

How to become a commercial loan broker

Table of Contents

  • What Does a Commercial Mortgage Broker Do?
  • How to Become a Commercial Mortgage Broker
  • What Is the Difference Between a Commercial Mortgage Broker and a Home Loan Broker?

What Does a Commercial Mortgage Broker Do?

How to Become a Commercial Mortgage Broker

What Is the Difference Between a Commercial Mortgage Broker and a Home Loan Broker?

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  2. Commercial Mortgage Broker Jobs
  3. What Is a Commercial Mortgage Broker and How to Become One

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How to become a commercial loan broker

When looking to grow your business as a commercial real estate loan broker, forming the right relationships is crucial.

A CRE loan broker’s primary function is to connect small businesses with appropriate financing solutions. To achieve this goal, CRE loan brokers must first build their connections throughout the commercial real estate lending industry.

There are numerous ways a CRE loan broker might expand their professional network. One of the most beneficial methods is through commercial loan broker affiliate programs.

The advantages of becoming a commercial real estate loan affiliate include a wider industry network. In addition, CRE loan broker affiliate programs offer unique channels for finding new business.

Analyze the benefits of the following top commercial loan broker affiliate programs to find the right program for your business.

Top Commercial Loan Broker Affiliate Programs

AVANA Capital

For nearly two decades, AVANA Capital has championed the growth of small businesses across the country.

AVANA Capital’s lending approach focuses on businesses within niche industries, including renewable energy, hospitality, and other owner-occupied commercial real estate. This specialized approach allows AVANA’s team to utilize its deep expertise to create a personalized financing solution for every client.

In addition to the company’s financing solutions, AVANA Capital has a business loan referral program for brokers. Through this program, AVANA works closely with some of the most prestigious brokers in the CRE mortgage lending industry.

AVANA Capital welcomes inquiries to its commercial loan broker affiliate program from brokers of varying experience levels. Thus, this allows the firm to work with brokers with years of experience and brokers who’ve recently transitioned into the commercial real estate sector.

As one of AVANA’s commercial real estate loan affiliates, brokers are protected from exposure. Additionally, brokers affiliated with AVANA Capital receive compensation according to a mutual agreement with a client on a given transaction.

The program guidelines that AVANA Capital follows with its broker affiliate program include varying loan types. These loans are AVANA’s SBA 504 loans, construction loans, and other financing structures.

Walnut Street Finance

Walnut Street Finance is a commercial real estate lender with over 30 years of combined experience.

Overall, Walnut Street Finance offers four loan types: fix & flip, acquisition, bridge, and construction loans.

The firm’s real estate broker affiliate program welcomes all real estate professionals, including commercial and residential brokers. Additionally, Walnut Street Finance does not have any licensing requirements for its affiliates program. As an affiliate with Walnut Street, a broker is paid points once a referred deal has been closed.

BFS Capital

BFS Capital’s team is passionate about providing a financing solution that is easy to navigate. The lending firm makes borrowing simpler for clients thanks to its online application process.

In addition, BFS Capital promises clients a borrowing process that doesn’t require any origination or processing fees. BFS Capital’s relationship-focused lending process makes the firm’s broker affiliate program an appealing choice.

Other aspects to consider include the firm’s proprietary models and automated underwriting process.

Biz2Credit

Founded in 2007, Biz2Credit has actively worked towards making its business financing solutions better. In the past 10 years, Biz2Credit has gained experience working with over 225,000 small business customers.

The financing firm’s affiliate program is geared towards real estate professionals from assorted backgrounds, such as CRE insurance services.

Partners of Biz2Credit can quickly compare financing options from multiple lenders to locate the best choice for clients. The firm also offers other tools, including a financial calculator to assess how a potential lender might evaluate a client.

GoKapital

GoKapital offers real estate financing solutions as well as other business loans. The commercial loan broker works with dental practices, restaurants, and retail stores, and more.

After applying to GoKapital’s broker affiliate program, brokers gain access to the company’s broker portal. This broker portal offers helpful resources, including training guides, marketing materials, and loan applications.

The financing company’s broker agreement outlines the different commission structures that the company uses. The structure that a broker can expect will vary depending on their level of involvement.

How to Become a “Best Broker” For a Commercial Lender

Posted by George Blackburne on Tue, Oct 16, 2018

How to become a commercial loan brokerCommercial Loan Tidbit: I learned tod ay that you cannot use an SBA loan to refinance an existing SBA loan.

Most commercial real estate loan officers working for banks have six to ten “best brokers”. Between these best brokers, the typical commercial loan officer closes 60% of his commercial real estate loan production for the entire year.

How to become a commercial loan broker

In other words, the typical commercial loan officer working at a bank with decent interest rates really doesn’t care that much about you or your particular commercial loan. You’re not one of this best brokers. You’re just a one-off commercial loan broker. One-off means just a one-time deal. There is little chance of a continuing relationship and future deals.

My son, George IV, competes against Alicia Gandy, our Loan Goddess, for the title of biggest commercial loan producer in the company. Alicia wipes the floor with him. Ha-ha! How come?

Putting aside the growing consensus that women are simply better, Alicia has about a dozen or so “best brokers” who constantly keep her rockin’. After all, Alicia has been originating commercial loans for Blackburne & Sons and C-Loans, Inc. for over twenty years. Many of her best brokers have been with her for over a decade, and they know exactly what kind of commercial loans that Blackburne & Sons prefers to originate.

How to become a commercial loan broker

What types of commercial loans does Blackburne & Sons prefer to originate? Blackburne & Sons specializes in small permanent commercial loans in the heartland of the United States.

We are NOT a bridge lender, although our loans have no prepayment penalty and make superb bridge loans. We like long-term loans because we make our dough from loan servicing fees. Helloooo? How many times have you heard me say that the real money in commercial real estate finance (“CREF”) is in loan servicing fees?

How to become a commercial loan broker

Does our preference for commercial loans in the heartland mean that Blackburne & Sons would never make a commercial permanent loan on the coast of California, New York, or Florida? Of course not! The problem is that the coastal areas are often very expensive, and our preferred maximum loan is $1 million.

Now you know enough to become a best broker for Blackburne & Sons. You understand our mindset. We like small deals with small payments because the default rate is 70% less, and we like long-term loans so we can earn our delicious loan servicing fees for a long time. Do you want your relaxing, supermodel massage to last for ten minutes or an hour? Uh, is this a trick question?

How to become a commercial loan broker

But enough about Blackburne & Sons. The $10,000 question, how do you become some commercial lender’s best broker.

Part of it is luck. If you happen, by chance, to bring a perfect deal to just the right lender, and the deal closes, that commercial loan officer will pay much closer attention to the next commercial loan that you bring him. He will look for a way to make the deal work. Samuel Goldwyn once said, “The harder I work, the luckier I get.” So work hard, generate a lot of commercial loans, and eventually you’ll get lucky.

How to become a commercial loan broker

The second way to become some commercial lender’s best commercial loan broker is to listen very hard when he tells you his preferences. If he is not doing land development loans, don’t keep bringing him land development loans. Listen to him!

The third way is to focus your commercial mortgage marketing in an area close to your office, and then bring your local commercial loans to local commercial banks. Banks like to make their commercial loans close to their branches.

How to become a commercial loan broker

Here’s a clever trick. Suppose your office is in Maine, and you get a chance to work on a commercial loan in South Carolina. How do you find a bank willing to make a commercial loan in South Carolina? Just open Google Maps and type in the address of the commercial property that you are trying to finance. Then hit the “Nearby” icon to find banks located close to the property. Voila!

How to become a commercial loan broker

The last way to become a commercial lender’s best broker is to become his friend. Invite him over to a BBQ and watch a football game with him. Bring his administrative assistant a box of chocolates or some flowers. Drop off some extra tickets to a game. Develop a personal relationship with your commercial loan officer.

I once knew a fabulously successful commercial loan broker who always brought cocaine and two hookers whenever he delivered an apartment loan package to his favorite savings and loan association commercial loan officer. Later that S&L went bankrupt, and my old buddy ended up on Skid Row in San Francisco; but for several years he made more dough than any other commercial loan broker I knew.

As for me, I’m content to earn $1,583 per month in loan servicing income for the next fifteen years on the $1 million pot loan that we just closed yesterday. Geez, guys, the real money in CREF is in loan servicing fees!

You just hit the jackpot! In a few seconds, even you- oh, suspicious one – will agree.

Here’s the deal. This is old man Blackburne writing to you. I have two wonderful sons who have recently joined me in the commercial mortgage business. I also have a bad heart. (Heart attack at age 50. Triple bypass.) I am therefore trying to write down everything I have ever learned in my 34 years in this business so that when I fall over from another heart attack soon, my sons will have a reference library to which they can later refer.

Does the old man know anything worth learning? My commercial hard money mortgage company, Blackburne & Sons, is one of the oldest commercial mortgage companies in the industry. After 34 years, we have survived at least four serious real estate recessions. We were one of a very small handful of commercial lenders that was continuously in the market throughout the Great Recession. I also founded the oldest and the largest of the commercial mortgage portals, C-Loans.com. Finally, I am an attorney too, licensed in California and Indiana. So yeah, the old man has a few things to share with you.

Let’s talk about your pocketbook. You could pay me thousands of dollars to train you in commercial mortgage finance. I have trained over 10,000 practicing commercial mortgage brokers, and I have earned close to $1 million in training fees. But you don’t have to pay me one red cent to spy on my training lessons to my sons.

You’ll learn about the new Debt Yield Ratio, and why life companies and conduits are now using this strange, new ratio. You’ll learn about the Debt Service Coverage Ratio. You will finally understand the Loan-to-Cost Ratio. And let’s talk about Cap Rates. I reduce this difficult subject down to baby language.

“Okay, George, this all sounds wonderful . but what’s the catch?”

There isn’t one. All you have to do is to sign up for my blog. In a few moments I am going to give you a link to my blog. You fill in your email address. That’s it. You’re done. Within months, by reading my blog articles, you will become a near-expert in this business.

God gave me a special talent. He made me stupid. It is soooo hard for me to learn. I used to drive my law professors crazy because I just couldn’t “get it” . My professors would have to pound ideas into my thick skull. But I ended up graduating from law school with honors.

My point is that I have to learn concepts using baby language – really simple terms with LOTS of examples. And that’s how I teach my sons (and you).

“Okay, George, I am intrigued . but I am even more suspicious.”

Why? Every day or two you’ll receive an email from me with the day’s lesson about commercial real estate finance. And as you’re reading this wonderful, new blog article and enjoying my free, wonderful training, I will be out playing golf.

Huh? That’s right. My friends call me The Golf Slut because I never-ever-ever turn down an invitation to play golf. How can I play golf four days per week? When you receive my blog articles, you will also remember Blackburne & Sons or C-Loans.com. You’ll bring us deals, I’ll make lots of money (and so will you), and I’ll be the one complaining about a putt that broke left instead of right.

Are you smart enough to kiss Jennifer Anniston if she asked you? (Sorry, you ladies please replace Jennifer Anniston with Tom Selleck.) If so, please click here, find my ugly picture, find the box below it, and insert your email address.

Commercial loan brokers act as an intermediary. What they do is act as a liaison between borrowers and lenders so that the right commercial loan can be obtained. Brokers can work independently on their own, start their own firm, or contract their services to consult on certain projects. Sometimes financial institutions don’t want to offer a loan that a business may need. Your job as a commercial loan broker is to find an institution that will or to locate one that will offer a better rate.

If you have a passion for the financial industry, then you’ll have taken the first step toward knowing how to start a commercial loan broker business. You’ll then want to follow these additional steps to create a successful business venture.

1. Look At What Your Licensing Requirements Are Going To Be.

Although most states don’t require a commercial loan broker to be licensed to bring financial institutions and businesses together, there are some that do. This may apply to only real estate loans, only non-real estate loans, or may be required for both. If you are required to be licensed, then you will need to meet the specific licensing requirements that are necessary, which could include certification and testing.

2. Get Your Structure Into Place.

You’ll want to know what the local demand for your services is going to be. This will give you an idea of how much of a percentage of the loan amount is that you’ll be able to charge as a fee. Most commercial loan brokers negotiate a percentage that is between 0.5-2.5% of the loan, with larger loans having smaller commissions. Some brokers may also have an application fee that is charged for services rendered at the time of the application. In the United States, the average application fee is $2,000.

3. Begin The Networking Process.

You’ll have extra work to do here as a commercial loan broker when compared to other businesses. This is because you’ll need to create a network of financial institutions and a network of businesses that need loans. Start on the supply side of things so that banks and credit unions will know that you’re looking to help them make some money. Then begin on the demand side to put people in touch with the funding that they may need.

To make sure that you’re not wasting time on the demand side of things, it will be important to create a system of pre-qualification that will help you know who is ready for a loan and who is just hopeful that they’ll get a loan. Evaluate receivables, assets, and whatever collateral may be available in addition to the current state of their credit.

4. Prepare To Be Patient.

Most loans aren’t going to close in a few days. It may take up to 60 days for a small business loan to close, while larger commercial loans may take 180+ days. This is why it is important to have the application fee in place in addition to the commission on the loan. If you’re waiting 6 months to get paid and the deal falls through on the last day, without the application fee, you’ve just eaten 6 months of work.

5. Develop Your Prospects.

In many industries, the cold calling field is dead. That isn’t the case in the commercial loan brokering business. Sometimes businesses are in need of cash and just don’t know how to secure the loan that they need to get. A phone call from you can be like a breath of fresh air. If you have a website that coordinates with your cold calling efforts, you can create a combination of marketing that will let people research the value of your services on their own and do most of the leg work for you.

The benefit of this combination is clear: you develop your prospects by letting them do most of the work. You just have to close the deal. Since your job is to close deals anyway, the marketing skills translate directly to the sales skills for a consistent experience.

6. Earn Your Worth.

You can work from your home office or you can hire dozens of loan officers and work from a central commercial location. The choice really is up to you. The only roadblock that will be in your way with this type of business are the ones that you put in the way. You really can earn what you’re worth when you are a commercial loan broker.

Knowing how to start a commercial loan brokering business is dependent on your ability to market your services to those who need them. If you can communicate a consistent message of value to the supply and demand aspects of your business, then you can have a successful career doing something that you love.

Being a commercial loan broker is one of the emerging careers today. Starting a commercial loan broker business is quite easy actually as you will serve a middle man for borrowers and lenders.

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This business offers more than prestige and power as this can be a good money making activity. There are certain steps you need to follow when venturing in this kind of business.

Being a commercial loan broker is becoming a popular career nowadays. When you become this kind of broker, you will serve as a middle man for borrowers and lenders. Your main responsibility is to help any person who is going to borrow money in selecting the best loans when it comes to attaining his or her financial goals. Being a commercial loan broker is not that hard as compared to any other kind of broker. You mainly secure loans for businesses so you are not bound by any institution related to lending. You can also seek the best loans that are perfect for your clients. Being a financial broker offer more than just prestige and power, it is a good money making activity. There is a huge market for this business because everyone at some point needs to borrow money. If you are thinking of starting your own commercial loan broker business you need to follow certain steps.

  • The important thing is to get securities licenses. Starting a commercial loan brokerage firms is just like opening a new business. You need to secure certain licenses to become legal. You need to be considered as a securities firm before you can sell one. In order to obtain a license, you need to pass a licensing exam as part of their requirements. It is advisable to take a course related to the industry to help you pass the exam.
  • Sometimes before you start to open your brokerage firm, you need at least a few months to train. There are a lot of brokerage firms that are willing to hire new brokers. Take this as an opportunity so that you can learn the in and outs of the trade.
  • As part of the basics, remember to do well in your interview. Jobs in the financial sector are known to be conservative. It would be better to play by their rules so that you will get a chance to be selected.
  • If you don’t have any educational background related to this field, it would be advisable if you read some journals and magazines regarding it. It pays to have knowledge on what you are dealing with so that you will become successful.
  • Normally commercial loan brokers work for a big company. Since you opt to be an independent contractor prepare to shed out money when it comes to your own business. You need to cover your own start up costs.
  • You need to strategize your own marketing plan in order to generate clients. Good marketing will be able to let people know about your service. It is good that you create your own social network so that your client base will be broad.
  • Remember that being a commercial loan broker, you earn profits through commission. Before venturing in this business, make sure that you have a background on sales. In this career, money might be a little tight but once you progress, you will earn more profits than ever.