How I Became “Lucky” As A Business Loan Broker and Why You Can Do It Too!

10-29-17 BLC Blog

I think I underestimate myself. Even after all these years, I think I got lucky. Lucky in many respects. Great wife, healthy (and smart kids), a pretty nice house (that is paid for), a pretty nice boat (also paid for) and a weird and unconventional career that allowed me to evolve through a bunch of entrepreneurial experiences and live a more carefree life than most.  But even after all this fortune (in more ways that can be measured in money). I still think I got lucky. The reality is that I did not. I always knew deep in the back of my mind that I had to put myself in a place to “become lucky”.

When I reflect back to the months and years that went by when I was aspiring to own my own business, I always thought there was some magic or some special attribute that business owners had and that I didn’t have. That thinking postponed my business ownership aspirations for many of my younger post-college graduate years. In fact, I don’t think I started my first “real” business until I was 33 years old, that’s if you don’t count my newspaper delivery business and grass cutting business when I was a teen. In hind site, those years working in the corporate world when I was in my twenties postponed my chance to become “lucky” and after I started my first real business, I still had not put myself in a place to become “lucky”.

My First Real Business…

My first real business, and when I say real, I mean I “quit my corporate job” real was a small instant printing company I bought (and most likely overpaid for) from my in-laws. I paid exactly $60,000 (financed through a local bank) for some old antiquated printing presses and some ancillary equipment. I entered a very mature industry that was declining fast as the technology was moving towards a “paperless” society. I spent nearly four years, scratching and clawing to pay myself less than I made in the corporate world then finally sold the business to a competitor who had some interest in some of the assets I added along the way. In hindsight, the only way I had a chance to become “lucky” in that business would be to invest millions in the new “on-demand” printing equipment and technology that would set me apart from all the “ma and pa” printing companies in town. I did not have the will or financial wherewithal to make that type of commitment.  So four years later, while still licking my wounds, I re-entered the corporate world. But the experience allowed me to make one of my most important discoveries about owning a business, there was no real “magic” involved. You offer a product or service that adds value to your customer and you charge a fee for it. Really anyone could do it even a teenager who cuts lawns to earn a few bucks. The real learning came from realizing that it would probably make a lot more sense to own a business where the upside potential could put you in a place to make you really “lucky”.  A business where you could do multi-million dollar deals and earn a fee without killing yourself on the fulfillment side of the business. It took a couple years to realize it was right in front of my eyes.

Ok, I had a somewhat unfair advantage getting started. You see, most of my previous corporate experience was in advertising sales and then selling equipment, postage meters to be more specific. These are the little machines that businesses would use to put postage on their envelopes. I would haul these machines around town and show business owners how they could avoid going to the post office all the time for stamps and how they could save money if they bought one of my weighing scales to go along with it. It was this sales job that gave me my first experience in finance because most of the machines I sold were leased. In fact, the company I worked for pushed leasing and created incentives for me as a salesperson to finance these machines (at extremely high rates) because they knew they would have an opportunity to upgrade these customers every three to five years and also made a ton of money on the finance side of the business as well. Later on in my corporate career, an equipment finance company called “MasterLease” (now De Lage Landen or DLL) hired a headhunter to go out and find good salespeople to help them find equipment vendors to run their financing through them and I guess “luck” found its way to me and I was hired in a very competitive field of candidates. Now, I was formally a professional “finance” guy even though I knew very little about finance. I did, however, know that financing helps you sell a bunch of equipment. When I reflect back on this hiring and this experience working in the equipment finance corporate world, I went through many of these years without having any formal finance training, I simply found deals (or had them referred to me by equipment salespeople) then submitted them to an internal credit department and they would either approve them or decline them. If they approved them, they would provide me with a set of documents to get signed and I would go get them signed. If they would get declined I would need to relay this information to my referral source or the customer, or both. Then I would move on to my next deal. The declines were the precursor to the start of my next business and this business is when I would finally put myself in a place to really become “lucky” and trust me when I tell you that the lack of formal finance education was not really important to my overall success.

Was I Really A Finance Guy?

Fast forward a few years, and a couple corporate equipment finance jobs later. I am now working for a major computer manufacturer providing financing to their resellers. Same deal though, I’m really still not a great finance guy but I was good at finding business. The dot-com boom is getting crazy with these highly sought after start-ups, and tons of venture companies are investing heavily in companies on a whim. All of these companies needed technology infrastructure. Deals that were good size too! $250k – $500k server farms, and other tech needs and I was finding a lot of these deals. The only problem was that the computer manufacturer I was working for did not have the credit risk appetite for any of them. I thought it was in my best interest to stay in touch with these customers who we declined credit to and see, if, and where, they were getting these deals funded. Many were successful in their efforts for getting their technology finance needs satisfied and usually had no problem revealing what funding sources would offer them financing and at what terms. I also learned that rates weren’t that important to them. They were in a race to get started and knew that higher rates were typical for the stage they were within their business development. I kept meticulous notes because my new start-up aspirations were simmering.

In December 1999, I’m ready for a 2000 business start-up. This time in a relatively low-cost start-up. A company that I could start for under $5k and have the potential to earn fees that were unbelievable. All I had to do was keep finding deals, and now instead of turning them into my company’s credit department and relying on their strict credit policies the whole world was mine to find a funding source and to earn fees and commissions that would make what they were paying me in the corporate world laughable (and I was actually getting paid pretty well). I was now finally in place to make myself “lucky”.

The spring of 2000 was frustrating, interesting, and a whole bunch of other emotions. I immediately hired two salespeople (bad move in hindsight) because I wanted to ramp up quickly. I also quickly made a name for myself and my newly formed company among computer resellers because of my experience in with getting these new dot-com start-ups done. In reality, only a small percentage were getting funded because the huge amount of garbage deals that were sent to me that would never have a chance with anyone. But I learned quickly, that a ton of money could be made when you funded a deal and that if I could sort through the fundable deals from the “time wasters” that this was the perfect business to make me lucky. But I would suffer another setback, later in 2000, the demise of the dot-com boom. Funding shut down, start-ups everywhere closing down because of lack of funding, and my new deal flow coming to a very abrupt halt. I needed to reinvent myself, and I did.

In 2001, I scaled back my operation, lost my two employees from them quitting, and  moved out of my office into my house, and then eventually on to a houseboat (which was really cool), and while I remained focused on computer deals, I branched out to do system furniture deals (cubicles) and also started doing more conventional types of deals because of dot-com bust that had just happened in my business. It was more sustainable business. The business was good, but not fantastic, but it was still much better than working in the corporate world and I knew that I was still in a good place to get “lucky” again!

My Office On The Houseboat…

My cool little office in the back of my 44′ houseboat. There was a local banker I did a bunch of business with would love to come visit me on the boat when we were doing business together. He did think I was crazy though!

I used my boat as an office in the winter months as well. It was one of my better experiences in my entrepreneurial life!

My Chance Meeting…

Sometime in 2001, I had a lunch meeting with an equipment salesperson in downtown Pittsburgh. Immediately after leaving the meeting, I almost literally bumped into another computer hardware salesperson on the sidewalk outside of the restaurant that I was exiting. He greeted me with a smile and a friendly hello and said: “we need to talk”. He then told me that one of his accounts, a fortune 500 company was not happy with the way they were being treated by their current finance company who did all their laptops and desktop computers nationwide and he wanted to help them out with a new partner. I just became “lucky” again!

After a few meetings with this major corporate company, and learning that they were ironically using the company that first hired me as an equipment finance salesperson. I knew that I could compete because they were greedy and I had funding sources that would allow me to not only to compete on rate but to also enjoy a lease structure that would allow me to enjoy a huge amount of upside from what they call interim rent and my own control of the ownership of all these laptops and desktops when the lease terms expired. Without getting into all the details, I was able to structure the deal in a way that I would own all the equipment at the end of the term of every lease. This, all while already having made huge fees on both the spread I made and the interim rents I received. Now, while all of this was a bit advanced, I was still a newbie to this part of the business and for the most part, I was still learning some of my more experienced funding sources who held my hand along the way. What is really bizarre is that if one of my initial funding sources had not screwed me on a $10,000 commission (that I sued them for and won) I would have never had learned about and enjoyed that structure that gave me so much upside. I guess you could say I got “lucky” again.

I Branch Out Into Commercial Real Estate Loan Brokering…

As the years went on, I decided to further my development in the business. After buying some commercial properties and developing a couple commercial properties I decided commercial real estate finance deals were very similar to equipment finance deals and that this niche would be a nice addition to my brokering business and while equipment finance would still be my mainstay, I want to add this to my arsenal. I decided the best way to do this would be to take a $10,000 class (currently priced a $13,000) that was being offered in Los Angeles. I spent three days learning mostly what I already knew. It didn’t turn out to be a complete waste of money though because I latched on to a couple funding sources who later did some deals that I might not have been able to get done otherwise. I also was able to fund my first commercial real estate deal. What is crazy about this deal is that it was for a Golf Country Club I belonged to and because of declining membership was falling on hard financial times. I refinanced a $1.7 million dollar loan earning a $17,000 fee that I allowed them to keep while enjoying a two-year free membership. So, yes I got lucky again.

In conclusion, while I think many business start-ups can get you out of the corporate grind and will put you in a place to become lucky, I cannot think of one business that has such low start-up costs, has fantastic returns, and has easy fulfillment requirements like starting a commercial finance company. Considering this type of business can finally put you in a place to become “lucky”.

Buzz Glover is a 17+ year experienced business loan broker and author of “Business Loan Brokering 101: The #1 Business Loan Brokering Guide” available on Amazon. He also is the founder of BizLoanConsultants.com an online mentorship program for those who want to get started in the low-cost start-up of brokering commercial business loans. If you have any questions about getting started as a business loan broker contact Buzz at sglover@BizLoanConsultants.com

PLEASE, PLEASE, PLEASE Leave a Comment!