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Entrepreneurs have a lot to deal with when it comes to running their small businesses. Securing capital can be a time-consuming and complicated process that some small business owners might not have the time or expertise to do.

Enter business loan consultants. A fee-based service, business loan consultants can help a small business owner identify the right loan product based on its situation. They can streamline the entire loan process by gathering the right documents, preparing applications, submitting paperwork, and working directly with the lender on any follow-up questions.

For entrepreneurs whose most precious resource is time, or first-time borrowers who are overwhelmed with the application process, a business loan consultant can be worth the investment. The U.S. Small Business Administration offers low-cost and no-cost alternatives to fee-based business loan consultants. 

What is a business loan consultant?

There are a lot of small business funding options and knowing what the ideal choice is for your business is not always straightforward. For example, there are working capital loans, term loans,CRE loans, SBA loans, and dozens of other financing options offered by a variety of lenders (i.e., online lenders, banks, credit unions). Each financing option has its application process and requirements around qualification, statements, documentation, credit profile (both business and personal), etc.

Operating your business daily is complicated and time-consuming enough; a business loan consultant can essentially take the entire loan funding process off your plate. A business loan consultant is an individual or company which charges you a fee for their expertise in handling the small business loan process. They do all the heavy lifting of comparing your funding options, determining what interest rate will work best for you, and preparing, submitting, and managing your loan application.

Some small business loan consultants are also loan brokers or are affiliated with lenders and can match you with a lender in their network. A small business loan consultant might be right for small business owners in these situations:

  • A first-time borrower or new business who is not familiar with the loan process or does not know where to start. Having an experienced expert guiding you through the entire process will de-stress the process.
  • A borrower with an atypical business.
  • A borrower looking for specialized funding. For example, maybe you are a nonprofit startup and need assistance understanding what loan program is right for you.
  • A small business owner who does not have the time to devote to the loan process.
  • A borrower who needs to secure business financing through a traditional financial institution that might require an extraordinary amount of supporting documentation.
  • A borrower looking for assistance with navigating pandemic-related loan options.

The cost of hiring and using a small business loan consultant can be worth it if it means the difference between obtaining or not obtaining financing for your small business. 

Pros of using a business loan consultant

There are a lot of benefits to using a small business loan consultant. They include:

  • Loan landscape expertise: There are a lot of loan options offered by a lot of lenders. Navigating and understanding the loan landscape can be very time-consuming. Knowing which loan to pick for your business is not always clear. A small business loan consultant can help you decide what the best choice is for your business. For example, if your business is looking to use the proceeds from a loan to acquire real estate, a business loan consultant will be able to pinpoint the specific loan that best fits your needs.
  • Manage application process: Once you’ve selected the right loan for your business, now you have to prepare, submit, and manage the application process. Depending on the loan you are trying to obtain, this could mean producing a lot of documentation, filling out forms, responding to lenders’ follow-up questions, etc. As a busy small business operator, you might not have the time to take this on.
  • Technical assistance: Loan-related language can be confusing and complicated. A loan consultant brings technical expertise to the table and will educate you on all of the terms and jargon used in the loan application process.
  • Specialize: Certain businesses need certain types of loans. If you happen to already know what type of loan you need, you can likely find a small business loan consultant who specializes in that type of loan you need. For example, a boutique clothing store based in New York looking to obtain a term loan can benefit from a consultant who specializes in helping New York-based retail businesses obtain term loans.
  • Lender network: Some small business loan consultants will have relationships with a network of lenders and they will shop your loan around. This might be because they are also a business loan broker, or because they have been doing this for so long that they have built up strong business relationships over the years. Either way, having a consultant shop your loan around can be beneficial and might increase the odds of you securing capital.
  • Time: Arguably the most critical resource for any small business operator is time. Ask yourself this, “what is the opportunity cost of me doing the entire loan application process myself?” In other words, what else could you be doing to grow your business instead of using your time to manage the loan application process? The answer is likely a lot of things. Hiring a small business loan consultant frees you up for higher-level activities. For example, a loan application process might require you to develop a business plan. A consultant can quickly guide you to what specifically you will need to include in the business plan, saving you a lot of time figuring this out on your own. 
  • Education: After you go through the entire loan application process with a small business loan consultant, you will be armed with knowledge the next time you try to acquire capital. For example, perhaps obtaining a line of credit will not be as intimidating or time-consuming because you’ve already walked through the process.

Cons of using a business loan consultant

There are drawbacks to using a small business loan consultant. They include:

  • No guarantee: Although a small business loan consultant is fee-based, there is no actual guarantee that your loan will be approved. Although the likelihood of you securing capital will increase, they are not lenders themselves and can’t issue you the loan. Having your loan application approved ultimately comes down to your qualifications. You might come across a consultant who claims to guarantee that your loan application will be approved. Tread lightly and understand their fee structure and what the guarantee means.
  • Cost: You will need to research the various fee structures for small business loan consultants to understand if you can afford the service. Small businesses are typically tight on cash and every dollar counts. Your cash flow might not afford you the luxury of hiring a small business loan consultant to facilitate your loan application process.
  • Some consultants’ fees are a percentage of the loan approved amount. If you are obtaining a loan for a very high amount, the fee can be very expensive.

How to find a business loan consultant

Finding the right business loan consultant for your small business is key. There are several ways to go about finding the right resource:

  • Internet search: Pull up Google on your web browser and start searching! Try searches like, “small business loan consultant near me”, “small business loan consultant [type of loan]” or “small business loan consultant [type of business]”. When you have narrowed your list, you can then do additional due diligence by searching for any online reviews posted about them, news articles, customer testimonials, etc. In addition to Google, you can also research potential consultants on sites like LinkedIn. Review the LinkedIn profile for the consultant and check for how many connections they have, recommendations, and how active they are. These can all be signs that they are legitimate.
  • Your personal network: Your friends and family might know a business loan consultant. You can tap into your network and see if anyone has any recommendations by posting on social media sites like Facebook and Instagram.
  • Business groups: Having a strong business network can be very beneficial. If you are part of a local business group, you can ask the group for their recommendation on a loan consultant. This should yield a better result than an internet search because you are likely going to get a recommendation from someone you know that has used the small business loan consultant in the past. 
  • Small business development centers: Your local town or city might have assistance programs offered by services like the Better Business Bureau, Chamber of Commerce, or even by a local business owners group, for you to educate yourself on locating a business loan consultant in your area. They might host local events for you to attend in person, or offer online educational webinars.

It’s a good idea to speak with more than one business loan consultant before making your pick. Having a point of comparison will allow you to make a more informed decision. Ask them for references from other businesses they have helped in the past.

U.S. Small Business Administration

The SBA has a network of partners for small businesses that offer free or low-cost counseling and training in your local area. The counseling and training will be more coaching and advising (i.e., hands-off from the actual application process) than what a business loan consultant can provide. However, if all a small business owner needs is a little guidance, this route might prove useful and more cost-effective. 

There are a lot ofSBA loan options andsteps to get approved for an SBA loan, and this coaching might be very useful and give you a good place to start. For more information on assistance from the SBA, visit theSBA local loan assistance web page.

There are business loan consultants that specialize in SBA loans. An SBA loan consultant can help your business understand the options and application process for obtaining an SBA loan. Whether that’s an SBA 504, SBA 7(a), SBA microloan, or something else, a loan consultant specializing in SBA loans can be helpful.

Getting Started

There are many ways to get a business loan for your small business and Biz2Credit is a great place to start. Our helpful staff will provide you with exceptional customer service and will work hard to understand the needs of your small business, the intended uses for your loan, and the best terms that can be offered. Get in touch today to find out the small business loan financing that can help you.

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