Email Question From Newbie Asking The Most Common Question “How Do You Find Deals When You First Get Started?”

Here is an email I recently received from a young professional who, at the young age of 21, already has some experience working as a sales representative for a loan broker. Unfortunately, his experience a sales representative for this broker has not been a good one. His story is not completely uncommon when working for someone in this industry and it is a shame because his manager gives the entire industry a black eye by treating his sales reps this way. The good news is that Frank has a great head start on what could be a really fantastic career when he learns some of the strategies and techniques that I teach. I asked Frank if I could publish his email as his question is one of the most common questions and hurdles a newbies will have when getting started in the business. How do you find deals?

Here is Frank’s letter:

Hi Buzz

My name is Frank, I’m 21 years old. I love your website and your book

(read it cover to cover).

Reason why I stumbled across your website is because I recently quit my job at a small business loan company in NY. The pay was good but the company is unethical and cutthroat. I found out my manager stole multiple commissions and deals from right under me for months and I didn’t even notice. This is why I quit.

I want to go solo and I’m hungry for money. That’s how I found out about you.

When I was working at that company. The leads were provided for me, I cold-called them, packaged the deals and my manager would present the deals to the lenders. (He had personal and great relationships with these lenders and I didn’t have access to any of them) The lenders would have several offers, my team leader would forward me the offers, and I would close the deal with my clients. When it came to big deals, my team leader would tell me that the client wasn’t approved or got declined, but in reality he just continued the deals behind my back.

After reading your book and watching your videos, I am inspired to start my own venture.

My main concern is finding deals.

How do I build a network of lead sources?

How do I establish these strategic relationships?

I don’t know anybody, I’m lost when it comes to this.

Im in NYC, it’s 2016

I can’t just call up a random commercial real estate broker and ask them out for lunch.

Nobody cares, no one has time for some sleazy loan broker.

Maybe in the suburbs or outskirts of major cities but I feel like it’s different in NYC.

I could be wrong though. I could really use your help Buzz.

Thank you!

Frank

First, real quick. Don’t consider yourself a “sleazy loan broker”, you are providing a real service for real businesses and in many cases could be saving them from complete demise.  I  realize that in my book, I gloss over how strategic partners are created. These are the partners who can send you multiple deals each year and in reality it is not as easy as setting up a lunch or a golf outing with an equipment sales person or a commercial real estate sales person as just making a call (even though I think this type of relationship building is important). So, in my response to your email, I need to meld two areas of my training together to provide you with an understanding of your best way to build a foundation for your loan brokering business: finding deals and choosing a niche. When many loan brokers get started they use a shotgun approach to their business. They call on everything and everybody, anywhere they can find a deal they want to find a deal. It’s the natural way for anyone starting a business, find business wherever you can. This might be through calling on equipment salespeople for equipment loans or leases, or calling on commercial real estate sales people. But here is the rub, you can’t wait too long to find a microniche within the business. The best examples I can give you of this are in two industries that I am very familiar with. Car washes and the crane industry. Anyone who knows me know that I have had two primary professional careers, business loan brokering and car washing. The reason I mention my experience the car wash industry is because after being in to for a while I know that there were two main players when if came to finance. I knew the one guy by name (who later moved on to a bank still doing mainly car washes) and the other company who showed up at every trade show and knew most of the major players. Also, in my last consulting gig with an equipment leasing start-up, we chose cranes as a vertical market and there was an existing broker who had already established himself in this vertical market as “Harry Fry The Crane Guy” (http://harryfry.com/) and while I am not sure what his actual volume was, based on my experience with cranes, I am very confident that he was absolutely crushing it as far as fees. He was known by all the crane dealerships, he advertised on the main crane websites, and I am pretty sure he (or one of his reps) attended all the crane trade shows. He had made a name for himself in a very good vertical market for equipment finance. The same would hold true for commercial mortgage brokering. You can make a name for yourself in retail, or multi-family, or some other vertical niche within commercial mortgages (i.e. car washes)! I have seen loan brokers choose loaning to franchise owners as a vertical. The possibilities are endless.

Ok, but with all that said, you still want to find a deal to get started. So what are the quickest ways you could go about finding a deal. If I were starting out tomorrow, I think I would make a concerted effort on calling existing regional bank loan officers. When these commercial loan officers decline deals they will sometimes make a recommendation to their client to use a local loan broker. You can approach them in way that is reciprocal in nature. When you first call them, you want to find out what type of deals they like doing and will they accept leads from a broker? When they hear that you are making their job easier and finding business for them they are much more likely to open up to you as many of the banks will accept brokered business (although some banks will require that the fee be paid outside of the deal on a separate agreement you have with your client). Later in the conversation, you want to pose the question “Mr Loan Officer, what do you do when your bank declines credit for one of your customers?”. The most common response will be one of two answers: I don’t do anything, or, I refer them to XYZ loan broker (most likely a guy who has wined and dined him or sent him sports tickets or some other relationship building exercise). After asking the question, you want to ask them if you can drop some of your business cards off ,or ask for a lunch, or some other type of connection. You will also want to immediately connect with them on LinkedIn and send them an email and thank them for the discussion. You will also want to make sure you use your CRM to add a three to four week follow-up, call, or email or some other communication. The goal is to keep your name in front of them until they send you a deal. It is not unusual in a conversation, for a guy to bring up a deal that he or she recently had to decline and while they might not give you the clients name they might give the client a heads up. Business with bankers is very reciprocal. In the summer of 2015, I met with a banker who did not do broker business. Because I was in a jam with a client who I viewed as very strategic to our success, I turn this banker on to a $2 million crane deal. He ended up funding the $2 million and an additional $3 million to this client that I gave him a lead on. Sadly, I did not earn a commission for a few reasons that I cannot get into right now. But early this month, the same baker called me with a $700,000 deal that was not rate sensitive. We are still working on the deal but if we win it it should pay 5 points on $700k deal or $35k. The point I am making is that you can also become know in the local and regional banking scene as a guy who can get “storied” credits funded based on your robust database of banks in your arsenal.

Lastly, what do you say to these prospective relationships when you talk to them. Here is what you need to keep in mind. It’s not about you, it’s all about them. My niche for most of my equipment finance career was in technology financing. I did laptops, PC’s server, networking and other types of IT equipment for both small and large companies. When I would talk with equipment sales people, I would always try to talk on their terms. After a warm up talking about some of their interests hopefully, sports, kids, or some other small talk, I would start to ask them about their sales process. Questions like:

  1. How many times do you meet with a new customer before they order?
  2. How competitive is the market place for their product and offering?
  3. Do they win more deals than they lose?
  4. When they lose a deal what is the typical reason?

Then finally, I would ask them “Do you quote a monthly payment on all your equipment quotes?” the answer more often than not would be “no”. This is where I could sell one simple solution for them to sell more. I told them they had great solutions on the “what” to buy and the “why” to buy off him, but was always leaving out the “how” to buy. This usually resonated very well with the equipment sales people because it makes sense. The reality is that most will not start calling you to quote every deal but it will perk their interest. I also was very familiar with the equipment they sold and could talk their language even though I wasn’t a true technology guy. I knew enough to be dangerous LOL. I also talked to them about experimenting with some creative finance/marketing programs. How they could offer a 0% finance program and how it worked. After a while of concentrating on technology, I made a name for myself around Pittsburgh and even nationwide during the dot.com boom of the late 90’s and very early 2000’s.

Here’s the brutal reality, it’s hard when you first get started. You need to jump in with both feet, hustle, make a bunch a calls, connect with a bunch of people on LinkedIn, go to trade shows and meet people at the bars, call on banks and do whatever it takes for someone to know you. It’s hard to train someone with all the inner workings of finding deals when they first get started. A lot of it is pure perspiration and taking baby steps into the markets that interest you most. Once the deals start flowing, the business comes much easier.  As they say at Nike, just do it!

Buzzie

Buzz Glover is the author of Business Loan Brokering 101: The #1 Business Loan Brokering Start-Up Guide available on Amazon. He is a serial entrepreneur who experienced much of his success through brokering business loans.

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