How to Start a Loan Consultant Business
There is often some confusion with the definition of the term "loan consultant." Loan consultants are sometimes referred to as professionals that originate loans for customers and are paid a commission based on the loan amounts. Mortgage loan officers are sometimes called loan consultants. However, a true loan consultant is a third-party professional who gets paid to advise clients on how to ensure they get the best financing terms from banks. Attorneys sometimes offer loan consulting services. If you have an interest in becoming a loan consultant and wish to start your own firm, you must have industry experience, a good marketing plan and solid referral system. The following information will help you properly set yourself up in a loan consulting business.
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Instructions
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Brush up on the lending industry. Examine current bank interest rates, prime lending rates, and familiarize yourself with how banks and lending representatives get paid and how loans are processed and underwritten (see Resources).
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Get a business license. Contact your state government, commonly your Secretary of State or Department of Revenue, to determine if your state requires a consulting firm to obtain a business license. If you need a license to operate, obtain and complete an application package and return it to the proper department. Expect to pay an application fee of up to $200 or more.
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Find your niche. As a loan consultant, you will be most successful concentrating on serving a specific sector of your market. Generally, consultants usually help residential or commercial borrowers obtain the best loan terms available. Keep in mind, however, that you will likely make more money per case if you specialize in consulting customers on their commercial real estate and business loans. Find a niche based your area of expertise and contacts.
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Rent an office. Look for an office in a fairly upscale area. Rent a space with at least two private offices, access to a conference room and a receptionist area. Spend a little extra on some nice, modern office furniture and solid computer equipment.
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Prospect for business. Start by getting to know the business people in your area. Network with corporate executives, insurance agents, attorneys, small business owners--anyone who could use your help securing the proper financing needed to run their companies. Join your local chamber of commerce, and advertise in newspapers, trade magazines and online (see Resources). Search your area for new businesses coming into the area. Get to know their owners.
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Diversify your services. In addition to simply charging a fee to help clients get favorable loan terms, successful loan consultants can offer other services, such as loan application processing and financial needs analysis services for developers and other commercial clients. You may also originate loans and charge a consulting fee in addition to commission paid to you by the lender if your state allows such transactions. If any of your strong suits are related to loans and you have the resources to get paid for them, offer them as part of your services.
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Tips & Warnings
Be fair, but demand what you are worth. Research other consulting firms and attorneys in your area for an idea of what to charge your clients. If you are good at what you do, you shouldn't have a problem getting what you are worth. Require prepayment when you can get it. Always require contracts.
Never offer services that constitute legal advice. If your clients need legal services, refer them to a law firm. Practicing law without a license is a serious offense in most states.
