Money Brokers Price Strategy Guide

Something else you'll have to convince your clients of: If he says he'll give up a share of his business in exchange for the use of your investor's money, he'll have to give up a very large share. Most small business investment corporations or private investors will want at least 25 percent, and more often than not, up to 49 percent. In some cases, where a half million dollars or more is provided by the investor, he may (reasonably) ask for as much as 70 to 80 percent. Thus it's absolutely essential that you learn to qualify your would-be borrower before you get too deeply involved or waste too much of your time.

For those who can't or don't want to pay your retainer fee - I say skip them. And those who can't or don't want to pay the high risk interest rates when you let them in on the real facts of life - forget them too. And those that have been turned down by practically every lending institution in the country, I would advise you - let some beginner gain practice on them. And these are the ones you need to learn to spot while you are a beginner.

You should determine exactly how much cash and other assets your client can or is willing to put into his proposed business. You'll have to be satisfied with the character of your client as a borrower; his record of paying his bills, how he gets along with people, and his overall chances of success. You'll have to do the checking of his references and credit record. You'll have to judge how he'll make good on the loan if the business goes sour. When these questions are answered to your satisfaction, you can go on with helping him put together a proper loan proposal and work toward getting him the money he wants.

Most successful money brokers charge according to the size and type of loan being requested. This is based on the amount of work they have to put in to place the loan. If it looks like a pretty solid business with a good record on the part of the borrower, and good collateral, the fees are usually lower. On the other hand, if it's a high risk proposal or if the borrower has very little business experience and you are going to end up doing a lot of selling to get the loan approved, your fee should be accordingly higher.

Remember that not all loans are approved, even though they might have looked good to you in the beginning. With this in mind, you have to charge for your services and make up for the time you spend with those proposals that don't get approved by charging and collecting on those that do get approved. An example of the typical commission charges is shown below.

Loan Amount Your Fee Commission
$5,000,000 1/2% $25,000
$2,000.000 1% $20,000
$1,000,000 1.5% $15,000
$500,000 2% $10,000
$100,000 3% $3,000
$50,000 4% $2,000
$30,000 5% to 10% $1,500 to $3,000
Under $30,000 10% $750 minimum

As we stated earlier, you can start this kind of business from the comfort of your own home or apartment, and do very well. However, just as soon as you can possibly afford to, it would be to your benefit it to set up an off ice with access to the general public. Your success and gross income will definitely benefit with an office.

You should set up your operation in a prestige location within or fairly close to the business and financial district in your area. Basically, this will be for impressing your clients, but at the same time, by locating in or near your local loan sources, you'll quickly come to know the important people on a first name basis. Perhaps the best idea would be to sublet space in a suite of offices used by an insurance company, accounting firm, or a group of lawyers. An arrangement can often be made for their receptionist to answer your phone calls and receive your clients. With a little bit of finesse, you might even be able to have one of their secretaries handle your typing and filing.