Five tips for brokers who place private business loans

Who Paul recorded it for

Paul recorded this off the cuff for mortgage and finance brokers who have started writing first and second mortgages for business clients, which he calls private business loans. He is clear that the tips apply whether the deal goes to HomeSec or to any of its competitors. They come from what separates the brokers whose files fund quickly from the ones whose files stall.

1. Know the client, and the real purpose

Name, address and company details are the start, not the job. A client who says the money is "for cash flow" has given a category, not a purpose. Ask what the cash flow problem is, who is owed, what happens if they are not paid and by when. The answers help the lender, but they also tell the broker where the file belongs. A client in no hurry can go to a lender with a sharper price and a valuation to wait for. A client who needs the money this week cannot.

2. Package it: neither underkill nor overkill

A rates notice and a one-line request for an amount is underkill. Fifty attachments and a four-thousand-word email is overkill, and it slows everything down. What a private lender needs is dot points on the fundamentals (the property, what is owed, the amount, the purpose, the exit and the date), a short note on what the client really wants the money for, and three attachments: the mortgage statement, the rates notice and ID. A file like that is read sooner and comes back with fewer questions.

3. Be available

Paul's most practical point. An urgent loan is a three-way piece of work between broker, client and lender, and a broker who disappears to a lunch or a training day at the wrong moment can cost the client the date. If you cannot be there, say so and hand the client contact to the lender. Every minute counts on an urgent file.

4. Always be straight with the lender

Paul's warning is that lenders find things out, and that private lenders talk to each other about which brokers they trust, without ever sharing a client's details. Paul tells of a broker who sent him an urgent deal on a Friday morning and rang back that night to stop it, because he suspected the client's wife did not know what was being signed. He was right. Everyone on the title has to sign and understand the loan, and that broker has had Paul's trust ever since.

5. Sell the solution, not the rate

The tip Paul says good brokers fall down on most. His hypothetical is a client offered several container loads of stock at a fraction of the usual wholesale price, but only with the money in the account tomorrow. The extra profit from that stock dwarfs the cost of a few months' borrowing, and a cheaper lender that takes weeks means no stock at all. Do not annualise a loan that will run for months. Paul is equally clear about the other side: if the client is not in a rush, a HomeSec loan is probably not the best option, and the right deal belongs with the right lender. The broker page sets out the published terms, and Broker A or Broker B shows the same choice as a role play.