For newer brokers, it's wise to recognize the limits and payoffs in commercial lending

Andrew Bogdanoff, president, Remington Financial Group

As published in Scotsman Guide's Commercial Edition, July 2008.

The sea of potential new commercial brokers is as wide as it is deep. Some want to learn more about the industry. Others might have dipped a toe into the commercial waters and are considering moving into the business full-time.

If you fit into one of these groups, you would be well-advised to go in with your eyes open. Many beginning brokers do not know the nuances of commercial lending but must learn them to make informed decisions.

For the right candidates, commercial lending is a perfect fit with tremendous rewards. But for the wrong candidate, the risks, stress and commitment to customers might break the camel's back.

Examining cautionary and positive aspects of being a commercial broker can help you understand the unique position you're in -- and help you understand how to proceed.

Challenges

The news about salaries in commercial lending is that, for the most part, there are none. Often, commercial lending is a straight-commission industry, where there are no draws and no benefits offered. It can be a radical life change for people unfamiliar with a commission structure.

It's common for beginning commercial brokers not to bring home one dime in the first two to three months on the job. It's generally recommended that people who can stomach the uncertainty of the commission structure should wait to enter the business until they have built a 60- to 90-day war chest to cover their personal financial obligations. By doing so, they can ensure that their personal or family situations are not adversely affected in the time it takes to learn the business and to build a solid lead base.

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