How To Approach A Lender About An Advisory Loan

Often, the activities and opportunities that can drive a financial advisory practice forward require capital. Luckily many specialty lenders have entered the financial advisor market, providing advisors with much needed access to capital. To make the most of these new lending partners, we’ve outlined a few tips on how to approach a lender about an advisory loan.

Contact Them Early In The Process
It’s important to reach out to a lender as soon as possible, especially if you are actively looking at a deal or are engaging with a seller or partner. Experienced lenders in the advisory market know what it takes to get a deal approved both within the bank and within the frameworks that govern an advisor’s practice. They can advise you on what will or won’t be approved in terms of deal structure, as well as help you identify risks and protections to safeguard your investment. Also, by contacting a lender early on, you can also eliminate any potential lenders who don’t have relevant experience in the advisory market.

Be Forthcoming
Most specialty lenders take a consultative approach to the lending process. For them to properly advise and guide you in the process, they need to have all the information. The more forthright and complete you are with information, the clearer picture they have of your situation, and the better able they are to direct you toward the right loan products, deal structure, and resources.

Know Your Practice Financials
When it comes time to start talking specifics, a lender wants to start by examining the financial health of the borrower(s) and the business. You not only want to be able to produce key financial documents, but you also need to know and understand how profitability, cash flow, and other key factors impact a lender’s decision. An advisor with a firm grasp on their practice financials instills confidence that they will be a good steward of bank funds and will be able to make good on their debt.

Be Proactive
As you move deeper into the process, your lender will provide you with a checklist of items needed to start putting together the loan package. The underwriting and closing process can move much more quickly when a borrower(s) is responsive to requests and supplies the needed documentation in a timely manner. Most commonly, they will require loan applications, business and personal financials, business entity documents, copies of identification such as a driver’s license, and other items related to the purpose of the loan. So be ready to have these available for the lender, and openly communicate any questions or challenges that you run into so they can help you navigate the process.

Don’t worry if it is your first time seeking a loan for your financial advisory practice. If you are honest, open, communicative, and ready to respond to their questions and needs, a lender will happily educate you and guide you through the process.

Looking for an advisor loan? Contact us now!

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