How to Set Up a Commercial Loan Business

Video Transcript

"Today's topic is setting a commercial loan business. Now setting up a commercial loan business is not all that different from setting up any business and in fact, you will still need to do all of the research and homework for that business that you will for any enterprise. You will want to have your investors if you are going to have them unless you're independently wealthy and going to fund your endeavor on your own which is a possibility, you'll need your investors and they will require you to provide them with your projections, and you'll also need to have your credit risk assessment prepared. You're going to need to know what criteria you're going to require your borrowers to meet in order to loan them money. And your investors are going to require certain minimum be met for their risk to be returned. And then finally, you're going to have to meet and exceed the rate of return over the interest that your investors expect. So whichever interest their money could be sitting in the bank getting, you're going to need to be sure that you can receive that from your borrowers and then some, and then pocket some yourself. And so there's a lot of consideration to go into becoming a commercial lender, especially in today's market."