Small Business Loans for Real Estate Agents: Best 6 Options

Volatile economies, seasonal variations, and seesawing mortgage rates mean perpetual challenges, even for the most skilled real estate agent. Closing an offer doesn’t always mean closing the deal, and closing the deal never means instant money. Meanwhile, the business expenses never stop and your mortgage payments are due every month. 

Loans for real estate agents can help you maintain your business during tough times. Whether you need help covering operating expenses, expanding your business, or even buying a new office, the right small business loan can help.

While a small business loan for real estate agents may be used for a number of purposes, choosing the right financial product ultimately boils down to a few factors. 

In this review, our experts highlight the rates, fees and terms of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.

Best Small Business Loans for Real Estate Agents - Full Overview

How to Choose the Best Real Estate Agent Loan

• Loan features. Take a close look at the specific loan terms, repayment optionality, and loan amounts, and how this applies to your business. For example, if you know you have a significant commission coming in in a few months, make sure the loan amount is sufficient to cover your business expenses until then.
• Application process. Consider the invasiveness of application information requirements, whether it requires a hard or soft credit check, the loan funding time, and any other distinctively competitive offerings. If you need funding sooner, online lenders typically offer a much faster and easier application process than conventional ones.
• Interest rates and fees. Find out about the different types of fees associated with taking a small business loan for real estate agents, as well as the minimum and maximum interest rates you may qualify for.
• Qualification process. What do you need to qualify for the loan? Think about the minimum credit score, annual revenue, and business history requirements.
• Customer support. Consider accessibility to a live customer support representative, the degree of multi-channel support, and the availability of supplemental information and tools.
• Online user reviews. To get the most accurate idea about the lender and its financial products, check customer reviews on independent review sites such as Trustpilot.
• Perks and bonuses. Consider specified service offerings like payment flexibility, advertising transparency, and advanced technology. As a real estate agent, you are likely to receive significant commission amounts at once. Therefore, it is a good idea to look for loans that allow lump sum prepayments.

How Can a Business Loan Help Real Estate Agents?

As a real estate agent, you might require additional funding for a number of reasons. 

• Opening a second business location or launch a new marketing initiative: a term loan can help you cover the associated costs. 
• Having money available on-demand in case of any unexpected expenses: In this case, a business line of credit is the optimal option for you.

Whatever you need help with, funding options for real estate agents are readily available from a variety of online lenders.

How Much Does It Cost to Open a Real Estate Agency?

Plan to invest between $10,000 and $50,000 to open a real estate agency – more if you’re looking for franchising opportunities.

Why does it cost so much to get started?

In part, it’s because it may take as long as 12 months to make your first sale. During that time, you’ll have to carry the overhead of office space, staff salary, and other operating expenses before you ever turn a profit.

The first piece of advice a seasoned agent will give you is to ensure you have a safety net. You should also keep your personal assets and work assets separate.

In addition to the money you will have already spent on your education, exams, and licenses, here are a few other categories that you need to consider:

• Property listing (varies): Depending on what service you're using, they either charge a percentage or a flat fee.
• Office budget (varies): When you start from zero, you might be working from your bedroom via online channels. However, buyers usually take you more seriously when you meet them face-to-face. You'll have to rent an office and set up a friendly operation, at some point. Here is where you'll need to pay for office space, stationery, utilities, and insurance.
• Staff expenses ($4,000): We assume that you've hired two brokers who also need to earn commissions.
• Marketing ($1,500): You can only go as far as your marketing efforts take you. Sure, you can work on word-of-mouth advertising, but you need an online presence, printed branding, and tools for lead generation. All that costs money.

As you can see, you will need quite a large sum as your startup capital. You will also need cash flow to cover the thousands of dollars of monthly expenditures.

Loans for Realtors Requirements

Although different lenders will ask you to show specific documents, we will outline a few standard requirements to guide you during preparation. 

You need to have a full review of your business financials, including tax returns, records, cash flow proof for the loan period, credit reports, and a business plan.

Most of the time, small real estate agencies get financed by their owner or partners' funds. This means that personal credit scores and history are also a top priority for lenders. The bank or the credit organization might reject the credit if the personal credit standing isn't good enough.

Can Real Estate Agents With Bad Credit Get a Loan?

Real estate agents need working capital financing, which is difficult to obtain from traditional lenders – unless the loan has an SBA guarantee or the agent has exceptional credit. Fortunately, a variety of alternatives are available to real estate agents from non-bank lenders.

Alternative sources generally desire to lend to real estate agents that have been in business for at least a year, have $100,000 of annual revenue, and have credit scores greater than 600. However, newer agents or those with bad credit may qualify for shorter-term financing, which entails borrowing less at slightly higher interest.

Conclusion

Now that you have a better idea of the small business loans for real estate agents available on the market, you need to decide what type of funding works best for your needs. If you are planning a major project, consider applying for a term loan. If you need funding to finance smaller ongoing purchases instead, a business line of credit would be a better option for you.

Once you settle on the type of financial product you need, make sure to review the qualification requirements and the features offered by each lender. With careful research and consideration, you will can find the ideal financial product for you and your real estate business.

*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.