How to set up a loan brokerage company

A loan brokerage company can be a successful business. But how can you build a loan brokerage company from the ground up?

Acting as a loans broker or intermediary can be a lucrative business and allow you to earn large commissions on introduction loan brokerage deals.

These deals include:

• Loans
• Credit cards
• Mortgages
• Business funding

However, to act as an introducer in the UK requires you to have certain regulatory requirements and also deliver a unique and valued proposition to attract customers.

Think about licensing requirements

If you want to create your own loan brokering business, you need to make sure that you are fully adhering to any legal requirements you need to meet so that you avoid any potential fines or have the company closed down completely.

One important step to take is to check you have the right license authorisation from the relevant governing bodies in the UK.

Currently you can apply for FCA authorization through the FCA website, which can take between 3 months to 18 months depending on your application and services you offer.

There are some industries where regulation is very strict such as personal loans and credit cards, and there are products where no regulation is required such as non-status lending, business loans and invoice finance.

What is the unique selling point of your company?

Before taking the steps to set up your company, you should consider what makes your firm different from others already available on the market. For example, will you only offer loans to a specific demographic or profession in the UK? Will you focus on benefits such as speed of application or finding the lowest cost product. Will you be a bricks and mortar brokerage that you see on the high street or will you be completely online such as Money.co.uk and Badger Loans.

There are always opportunities to take advantage of growing industries such as equity release, bridging finance or business loans – things which people often struggle to get from high street banks. Or you can look at working in a mature, saturated market, with knowledge that there is a high consumer demand such as credit cards or personal loans.

Do you search for high volume or low volume deals? With mortgages, you may only need a few deals per month to make a good living, but with credit cards, you will probably need thousands of sales per month.

Some brokers and comparison sites focus on added benefits which customers cannot get elsewhere such as:

• Cashback
• Introductory offers
• Air miles
• Free vouchers
• Group discounts

Agree commercials with companies

If you are setting up a loan brokering firm another thing you will need to take into consideration are dealt on commercials with other firms. For example, would you be willing to agree on a cost-per-funded deal or would it be preferable to receive a flat- fee? This is an important question to carefully think about before making an agreement. Can you get a deal on exclusivity and earn a higher commission with a particular lender?

How do you attract customers?

Using online search such as pay-per-click advertising (PPC) and search engine optimization (SEO) are popular ways to get customers already searching for your products. Otherwise, using social media such as Facebook, Instagram and Linkedin can help you build up a following and gain interest in your business.

Other marketing forms including creating partnerships with other similar companies, referral schemes, SMS and email marketing too.

How will you deal with customer support?

When creating a loan broker firm you need to make sure you are providing excellent customer service for your customers. This is of paramount importance, as bad service will mean you will not retain customers and those who have used your loan brokering services and haven’t had a good experience aren’t likely to recommend your business to friends or family.

There are different customer support team options available to you. Many businesses will provide service support by email, phone, and increasingly Live Chat. This is where the business takes questions from customers in real-time and provides advice on other aspects of the loan application.