Do you have clients in need of small business funding that you can’t provide? If you’re a bank loan officer, accountant, business consultant, financial advisor, lawyer or similar type of professional, you’ve probably found yourself in this situation. When searching for client funding solutions, you may want to consider forming a partnership with an alternative finance company.
Although the economy is on the rebound and the demand for small business funding on the rise, the financial crisis of 2008 has caused traditional funding options to be in short supply. The typical small business loan is around $500,000. Processing these smaller loans costs just as much to process and yield less profit than larger loans. For this reason, many traditional financial institutions have scaled back on the number of smaller loans they approve.
As a result, there has been an increase in alternative finance providers and the funding options they provide. Many also offer referral programs and partnerships. These enable professionals to connect clients with a provider that is much more likely to be able to approve their funding.
Partnering with an alternative finance provider is beneficial for everyone involved. Your client receives the necessary funding, the provider gains new business and you not only receive financial compensation but you create a stronger relationship with your client. Most alternative financing companies offer a variety of options that allow you to provide beneficial client funding solutions. Depending on your profession and the level of commitment you want to make, you can choose the option that works best for you.
Referrals are a great way to start working with an alternative finance company and involve the least amount of time and commitment on your part. If you have a client who has been struggling to get small business funding, you would simply refer them to the company you are working with and your work is done. If funding for your client is approved, you will receive a referral fee. Fee amounts and payment procedures vary from provider to provider.
Once they experience the benefits of being able to offer client funding solutions, some professionals choose to become an ISO (Independent Sales Organization). With an ISO program, you would actually help your client choose the appropriate funding options and guide them through the application process. Working in conjunction with the alternative finance company, you would complete the funding agreement and deliver it to your client. More work – yes, but with a bigger reward. As an ISO you would receive a commission that would be more than a referral fee.
The previously mentioned programs would work for most professionals but platform partnerships are better suited for banks and other traditional financial institutions. The alternative finance company would work with the bank as a “white label” provider which is like being a silent partner. They would process the application using their digital software. but it would be done as a service of the bank.
The application is evaluated by both the bank and the finance company’s criteria. The bank will provide the loan if the application meets their criteria. If it fails to satisfy the bank’s criteria but meets the finance company’s requirements, they will provide the funding. The financing company receives the income generated by providing the funding while paying the bank an incremental fee. In addition to that fee, the bank retains the relationship with a client that they normally wouldn’t have been able to fund.
Alternative finance partnerships can help you gain more clients, create long-term relationships, increased customer satisfaction, and a new ongoing residual stream. CapFlow Funding Group offers programs that range from simple referral relationships to fully integrated programs in which you choose your level of involvement. Contact us and let’s talk about working together to provide client funding solutions.