BUILD-A-BROKER
Helping Minorities Succeed Against All Business Odds
Follow these steps to overcome challenges to starting your brokerage BY HANNAH FERNANDEZ | SPECIAL TO NATIONAL MORTGAGE PROFESSIONAL
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re you a minority in the mortgage business with aspirations of owning your own brokerage? Expanding your existing business? There are practical considerations to undertake, especially as your economic grows. Aspiring entrepreneurs and small business owners can significantly boost the U.S. economy. However, many have to overcome challenges including inadequate access to capital among other barriers. Minorities, including Hispanics, are starting businesses at incredible rates. In fact, Hispanicowned small businesses are the fastestgrowing groups of entrepreneurs in the United States, and according to a study from Stanford University, they contributed approximately $500 billion to the U.S. economy in annual sales. Although Hispanic and other minority entrepreneurs are becoming an economic force, they are underrepresented in business. Eliminating obstacles that hinder the progress, growth, and success of these small businesses is an imperative that can drive innovation, create jobs, and grow our nation’s economy. Lack of access to capital is one of the major issues faced by Hispanic business owners, and it blocks business growth. Many do not get the funding they need.
Most who were denied financing got turned down more than once, and they don’t even know why their applications got declined. As a result, Hispanic, Black, and women-owned businesses are either hesitant or not applying for loans altogether due to frustration and fear.
SECURING FUNDING Most banks won’t lend to small businesses because they consider them risky as small businesses typically have fewer assets to provide as collateral. Additionally, transaction and underwriting costs are almost the same for small loans as larger ones. This causes banks to focus on loan amounts over $1 million. Non-profit microlenders fill a niche for small businesses that might not otherwise qualify for a loan. However, these lenders usually focus on loans under $50,000. Thus, in the spectrum of small business lending, there exists what’s called the “missing middle” gap, where the capital amount of $50K to $1MM that most business owners seek is too small for a big bank but too large for a nonprofit lender. The good news is there are various funding options available, including · business credit cards · invoice factoring · equipment leasing
· unsecured short-term business loans · asset-based loans or lines of credit · SBA guaranteed loans The key to getting approved is understanding exactly what lenders are looking for and knowing what your financials are telling them. When you know your numbers and have your financials in order, you increase the likelihood of getting approved for funding.
PREPARATION IS KEY There are countless stories of how unwavering persistence led to massive success. For instance, in order to get his coffee company Il Giornale off the ground in 1985, Howard Schultz had to raise more than $1.6 million. He spoke to 242 people, and 217 of them said no. It was disheartening, but he pressed on. Two years later, Il Giornale bought Starbucks and Howard Schultz became its CEO. All businesses experience challenges so do not get discouraged or frustrated if your plans for a mortgage business face roadblocks. Remember you do not have to do this alone. There are many organizations that can provide you with technical assistance on becoming fundable. Make sure to monitor and know the exact financial health of your business. Be upfront and do not lie
PEOPLE ON THE MOVE //
> SimpleNexus
appointed board member Cathleen Schreiner Gates as its president.
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| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE
> Roostify
named Chris Boyle to the newly created role of president at Home Lending.
> SLK Global
Solutions added Casey HughesWade as vice president of mortgage relationship management.
> C2 Financial
Corporation promoted David Temko to president.
