Building Your Commercial Finance Broker Business
The post-pandemic era is on the horizon, some would argue that it has already begun. How small businesses faced the challenges of the pandemic is only now being assessed, but the general outlook is a split scene – on one side are companies that performed well during the crisis and actually grew during the pandemic, on the other side are companies that suffered losses. In both cases, funding sources will need to be found to support the continued growth or the recovery efforts of these businesses. As the commercial banking system is now structured to favor big business and corporate entities, alternative lenders are poised to be the major source of funding for SMBs. This is fertile ground for commercial finance brokers to grow their portfolios.
The Economic Outlook
The pandemic has turned the economic landscape upside down, causing dramatic divergence with some industries taking off while others suffered badly. As the economy starts to settle into its new normal, these sectoral differences are expected to narrow with industries returning to resemble their previous relative positions. Companies will be gearing up to raise themselves out of survival and into growth mode. SMBs showing resilience with the ability to absorb shocks and use them to build competitive advantage will outdistance their competition. To accomplish this endeavor, SMBs will look to commercial finance brokers to arrange reliable sources of funding with flexible terms and credit limits.
An independent survey of small business performance in 2020 revealed that 40% of small businesses lacked the working capital to operate efficiently. To adjust to this financial constraint, 70% of the businesses surveyed cut their operating budgets during the pandemic. The areas most affected by these budgetary cuts were:
- Marketing and advertising
- Payroll (often resulting in layoffs)
- Rent and mortgage expenses
- Business insurance
While it’s great that businesses survived by taking these dramatic steps to reduce costs, they now need to reinvest in staffing, training, inventory and innovation to uplift products, improve services and rebuild productivity. The demand for commercial finance brokers to source funding to meet these investment needs will only grow over the coming years.
Reliable, Flexible Funding
For commercial finance brokers to thrive in this fertile environment, they will need to provide viable cash flow solutions and reliable access to working capital to their clients. The ability to provide these solutions is dependent on the broker’s ability to source alternative lenders with the financial means and industry experience to support the deal. It pays to establish a working relationship with lenders and get to understand their capabilities and limitations in advance of brokering deals to support clients. Failure to do this relationship building upfront will severely limit a commercial finance broker’s ability to react quickly and efficiently to new opportunities, forcing bad habits to take the place of proficiency.
Following are the bad habits commercial finance brokers can fall into and should make every effort to avoid:
- Chasing the “Big Whale” deals only: It’s tempting for a commercial finance broker to be seduced by the commission potential of transactions in the tens of millions and lose sight of the importance of smaller bread and butter deals. In general, the larger a deal gets the more complicated the financial structure becomes – careful due diligence is mandatory. Unrealistic business goals and the potential for fraud increases as the size of the deal grows necessitating the need for increased due-diligence. These larger deals take extended time to conclude the transaction and therefore eat up a lot of man power and energy in the process. Smaller bread and butter deals are needed to maintain a regular revenue stream. Be sure to work with alternative lenders experienced in the industry the deal is to serve and have the financial bandwidth to accept both smaller deals and the big whale deals we all like to chase.
- Not understanding a lender’s core competency: A common pitfall that commercial finance brokers fall into is trying to promote a lender’s product and services without fully understanding how that lender is suited to solve your client’s industry problems. Find a lender that has the financial depth and industry experience to understand and solve the financial barriers that hinder your client’s business. As the broker, you need to be able to highlight the benefits of the lender’s products and services rather than just the features.
- Forcing a square peg into a round hole: Often a commercial finance brokers will attempt to push a deal through with little regard for the lender’s underwriting criteria. This is definitely the wrong approach as it will create a sense of incompetency from the lender’s point of view and undermine your relationship with them.
Who is eCapital?
eCapital is an alternative lender servicing thousands of customers across the US and Canada with working capital facilities to businesses in about 80 industries. In pretty much all cases, we are the senior lender providing the entire capital that they need to support their existing operations and growth plans.
Our vision is to lead the way as an innovative provider of capital solutions for small and medium-sized businesses. Our reach is across North America with current expansion taking place to secure our brand in European markets. Our development plans are based on organic growth, acquisitions and expanding our network of commercial finance brokers.
How Can eCapital Help Your Commercial Finance Broker Business Grow?
eCapital is dedicated to supporting a robust commercial finance broker program to help our broker partners meet their clients’ funding needs with tailored financial solutions. Work with eCapital, a partner you can rely on to earn big, strengthen relationships and help you grow your business:
- Competitive Commission: Get paid for every deal we fund, with no limit on what you can earn.
- Education and Training: Learn the features and benefits of our industry leadings products and services to meet your clients’ financial needs. Take advantage of our training materials, resources and sales collateral to grow your business.
- Professional Experience: Our team represents decades of combined experience in a multitude of industries with core experience in manufacturing, staffing, warehousing, transportation, and much more. Leverage our experience to strengthen client relationships, gain trust and become recognized as a financial specialist in your clients’ industries.
- Flexible Terms and Credit Limits: eCapital provides tailored solutions with flexible terms to best leverage the strength of your client’s business assets. As the valuation of these assets grow, eCapital increases credit limits to gain even more access to working capital. In other words, the more your client business grows, so too does their funding facility.
eCapital’s relationship with our broker partners is at the core of our business – building your business with integrity, transparency and mutual trust is fundamental to our success. Our simple approach to financing means minimal paperwork and fast turnaround time. Use our quick and easy online application to submit referrals.
The Broker Referral Process
We are here to help grow your business. It starts with a simple referral process:
- Register: Get in touch to request our commercial finance brokers agreement
- Submit Referrals: Use the online application form or give us a call.
- Get Updates: Receive weekly updates on the status of your referral.
- Start Earning: Get paid for every deal we fund, with unlimited earning potential.
The services provided by eCapital include:
- Account receivables
- Inventory, supply chain and import financing
- Equipment financing
- Asset based lending
You can count on our support every step of the way. At eCapital, our focus is on creating financial solutions that optimize how your clients’ businesses leverage the assets they have at their disposal. Tap into our financial resources, varied industry experience and support services to build your commercial finance broker business with the right tools to ensure your success.
For more information on how eCapital can help your commercial finance broker business grow, visit eCapital.com.
Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.
We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.