Introduction to Module 6 Finding and Matching Funding Sources For Your Transactions
In an Ideal World… You are generating business in a niche locally You are generating business in a niche nationally • You have your "go to” local bank • You have your "go to” national bank • They like brokers • They like brokers • They have aggressive rates • They have aggressive rates • They have fast turnaround time for credit • They have fast turnaround time for credit decision decision • They offer private label documents • They offer private label documents • They are your back room • They are your back room • You are like an employee of this funding • You are like an employee of this funding source except you do not need to put up source except you do not need to put up with all things you hate about being an with all things you hate about being an employee. employee. • You still have the ability to shop the deal if • You still have the ability to shop the deal if they do not like the credit. they do not like the credit.
This Ideal World Does Not Happen Overnight It becomes more natural to have “go to” source after you develop your niche.
Module 6: Finding and Matching Funding Sources For Your Transactions Submodule 1 Equipment Finance Deals Submodule 2 Commercial Real Estate Finance Deals Submodule 3 Other Types of Products Submodule 4 How to Present and Using Dropbox Submodule 5 Master Database File
Submodule 1 Equipment Finance Deals - Intro • Resources you can use to find funding sources • What you should know about local and regional banks • What do you want to look for in a funding source • How do you finally decide on a funding source to submit to? • Who do you ask for? • When do you contact them? • How many funding sources do you shop the deal to? • What information do you want to put into your database about a funding source? • An interesting business model you might consider once you get good at this.
Submodule 1 Equipment Finance Deals - Part 1 Resources To Find Equipment Finance Funding Sources • ELFA https://www.elfaonline.org/ • NAELB https://www.naelb.org/ $369/Year • The Monitor Daily http://www.monitordaily.com/ • Leasing News http://www.leasingnews.org/ • Local Banks • Regional Banks • National Banks • Google • BizLoanConsultants Database • Past customers you were unable to close a loan with.
Submodule 1 Equipment Finance Deals - Part 2 What you should know about local and regional banks leasing departments… • Usually very small one or two person teams • Their job is to go around to their branches and teach branch managers, business bankers, commercial lenders, and others about making sure they get the referral. • They move in and out of the business • They will typically have the best rates • They are more inclined to do small ticket leases (up to $250K) • App only deals will normally be fast (but not as fast as national Lessors) • Bigger (non-app only deals) say over $75k will be slow • They normally not have formal broker approval processes.
Submodule 1 Equipment Finance Deals - Part 3 What do you want to look for in a funding source? (Preliminary information) • Will they do broker business • Direct lender vs rebrokered • Rates • Credit windows • Turnaround time • Equipment types • Reputation in broker community
Submodule 1 Equipment Finance Deals - Part 4 How do you finally decide on a funding source to submit to? • Does the deal seem to fit into your “go to” lenders borrower profile? • Is it an application only? • Who are the “application only” lenders in your database? • Who has the lowest rates? (typically it will be a local or regional bank) • Who has the fastest turn around time? • Who is most likely to do the deal based on what you know about the credit?
Submodule 1 Equipment Finance Deals - Part 5 Who do you ask for? • Do they have an equipment finance or equipment leasing person or division • If not, how do they handle a request when one of their business customers want to finance a piece of equipment? • Do they do leases at all? • Do they end up providing a LOC or other product. • Sometimes the person who answers the phone does not really know and you need to move up the food chain (branch manager, commercial lender, etc..) • Keep in mind that all of these people have annual budgets too and what better way to reach their budget than partner with a broker! • If you already are doing business with their commercial banker, ask them for an introduction to the correct person (they get credit for this in some banks)
Submodule 1 Equipment Finance Deals When do you contact them? Part 6 • Always better if you have a deal in hand but not absolutely necessary • Give them the bullet points not the customer name! • In some cases they will have already seen the deal. • You can also ask them about their declines
Submodule 1 Equipment Finance Deals - Part 7 How many funding sources do you shop the deal to? • My method was send to your “go to” sources first, then typically three sub prime lenders afterward. • Low rate players expect some loyalty • Sub-prime lenders expect some loyalty as well but realize it is more di ffi cult to get based on the space the play in
Submodule 1 Equipment Finance Deals - Part 8 What information do you want to put into your database about a funding source? Contact name, phone number, email • Do they do broker business? • Do they have an approval process? • What is their footprint - International, National, Regional, Local? • What deal size? • App only to what $$$ amount? • Credits accepted (A only? A, B, C programs) • Rates for A, B, C, credits • Do they have a direct sales force? • Equipment they like • Equipment they don’t like • Turnaround times based on deal size • Fee limits • Document requirements • How to submit deal • Notes •
Submodule 1 Equipment Finance Deals - Part 9 An interesting business model that I want to explore WARNING - THIS IS A SOMEWHAT ADVANCED STRATEGY - PLEASE WAIT UNTIL YOU ARE COMFORTABLE WITH YOUR BUSINESS AND WHAT YOU HAVE LEARNED BEFORE YOU PROCEED! ALSO, IT IS NOT PROVEN BUT I HAVE SEEN IT DONE BEFORE.
Submodule 2 Commercial Real Estate Deals - Intro • Resources you can use to find funding sources for commercial real estate deals. • What do you want to look for in a funding source • How do you finally decide on a funding source to submit to? • Who do you ask for? • When do you contact them? • How many funding sources do you shop the deal to? • What information do you want to put into your database about a funding source? • An interesting business model you might consider once you get good at this.
Submodule 2 Commercial Real Estate Finance Deals - Part 1 Resources To Find Commercial Real Estate Finance Funding Sources • Scotsman Guide • Local Banks • Regional Banks • National Banks • Google (“hard money commercial real estate lenders”, “conduit lenders”) • BizLoanConsultants Facebook Page (ask other students) • Past customers you were unable to close a loan with • C-Loans (http://info.c-loans.com/trade-one-banker-for-seven-hundred-and- fifty-commercial-lenders)
Submodule 2 Commercial Real Estate Finance Deals - Part 2 What do you want to look for in a funding source? • Size of bank and deal, match loan size to bank size • Match property geography to bank geography • Direct lender vs rebrokered • Rates • Credit windows • Turnaround time • Reputation in broker community (protection from NDA)
Submodule 2 Commercial Real Estate Finance Deals - Part 3 How do you finally choose a funding source? • What structure are they looking for? • Does the deal seem to fit into your “go to” lenders borrower profile? • Where is it located? • How big is the deal? • Is it a “storied” credit? (hard money loan?) • Who has the lowest rates? (typically it will be a local or regional bank) • Who has sent you leads?
Submodule 2 Commercial Real Estate Finance Deals - Part 4 What you should know about local and regional banks commercial loan departments… • They will sometimes do smaller deals that bigger banks do not have an appetite for. • They will sometimes know the market better than the larger banks. • They, in many cases, know the reputation of the developer in new construction projects. • They will typically have the best rates. • They are more inclined to do smaller deals. • They are more likely to give you leads on deals than large banks.
Submodule 2 Commercial Real Estate Finance Deals - Part 5 Who do you ask for? • Who handles their commercial real estate loans, could be titled “Commercial Lender”, “Commercial Banker”, or “Business Banker” • Sometimes the person who answers the phone does not really know and you need to move up the food chain (branch manager, etc..) • Keep in mind that all of these people have annual budgets too and what better way to reach their budget than partner with a broker! • If you already are doing business with their equipment finance rep, ask them for an introduction to the correct person (they get credit for this in some banks)
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