July 20, 2022

Become A Funding Source For Your B2B Customers

As a B2B organization, when you see your customers facing challenges, your entire purpose is stepping in and being that reliable, go-to solution provider and problem solver.

Interested in Lending to Your B2B Customers?

Here’s How to Start

Okay. You’re a B2B business owner or an executive-level decision-maker.

Either way, you undoubtedly have tons of high-value tasks on your plate. You must establish company culture, make all your employees feel like they’re working toward a shared grand vision, and carry that executive-level swagger.

But there’s one responsibility that tops them all--capitalizing on growth opportunities. 

Your other main focus is building your brand. 

Really, though, growth opportunities and branding are one and the same, or close to it. Taking your organization to new heights and expanding is virtually impossible without cultivating your brand identity.

What does this all have to do with lending to your business partners? Read on to find out:

Taking Your B2B Business to the Next Level

Loanspark’s Educated Guess About Your B2B Business

Now, here’s where we get into the hypothesis part of this article. We’re willing to bet--especially since you’re reading this piece--you’ve been scouring the ends of the earth for your next growth-related initiative.

Here comes the next part of our educated guess. 

You’ve likely happened upon specific pain points shared by many of your customers while performing your necessary research.

What’re Your B2B Customers’ Most Significant Pain Points?

As a B2B company, many of the small businesses you work alongside are likely strapped for cash, especially with COVID-19 relief coming up short for these customers.

Furthermore, in general, 30% of small businesses crumble due to a lack of capital. And on a broader scale beyond pandemic assistance, big banks only have a loan approval rate of 27%.

Even if those businesses go to a smaller, lesser-known financial institution, they can only take their chances on a 50.1% approval rate. Whereas credit unions approve less than 40% of business loans.

We don’t know about you, but that all sounds pretty painful to us. And the strife your customers are currently experiencing can be a residual sore spot for your business.

Your Customers’ Pain Points Directly Impact Your Business

When your customers hurt, you hurt.

The less upfront cash your clients have on hand, the less they’re inclined (or able) to spend on your products or services. Let’s then take it another step further. A cash-strapped business--unable to invest in products and services such as your own--is also a business not long for this world. Never mind spending LESS on your business--you’ll lose out on that source of revenue altogether.

Of course, your clients are more than numbers to you. The relationships you’ve developed with these fellow businesses over the years mean something on a personal level. You want to do everything in your power to help them survive for reasons beyond your mutual benefit. 

That said, when your customers thrive, so does your company. It only makes sense that you’d do whatever you can to keep your clients in a state of perpetually heightened economic wellness. 

How Can Your Business Solve the Problem?

As a B2B organization, you deal specifically in problem solving and solutions. When you see your clients are having issues, your entire purpose is stepping in and being that reliable, go-to solution provider and problem solver. 

How can you step up in today’s small business landscape with the problems and pain points highlighted?

Hint: the answer doesn’t exist in your current line of products. Well, not the whole answer, at least.

No, instead, you’re going to have to dig a bit deeper and think of a way to pivot to make your company the missing piece of the current B2B marketplace puzzle. 

We’ve been skirting around it for a while now, hoping you’d connect the dots. But we’ll hit the nail on the head. Your next substantial growth opportunity likely exists in business lending.

“But my company isn’t a bank or credit union,” you say. “How are we supposed to lend money?” A fair question, no doubt. But we’re here to quell those uncertainties.

First, you don’t need to develop a backend, nor do you need to supply the funds being lent and borrowed. All you’re doing is providing an immediate financing solution for your B2B clients who need help staying afloat. Or, they just need to capitalize on their own growth opportunity for which they lack the upfront funding. Either way, you get to be the one to make it happen, establishing endless goodwill.

What’s more? The loan will be completed top-to-bottom with your branding and nobody else’s. No middle-man will muddy up your message. 

From the point your client enters your website to when they procure their loan (and likely purchase your other product/services with the added funds), they’ll be immersed in your brand. 

We’re willing to admit this all sounds too good to be true. But it’s the service we provide at Loanspark, and it’s called Co-brand Business Lending.

Images by Loanspark

Is Loanspark--and Co-Brand Business Lending in General--Just Another Middleman?

It must be said that Loanspark functions as a third-party, co-brand company that molds our lending products to your branding. 

So, you could argue that we’re a middle-man that muddles things up. You’d be mistaken by making that argument, but we’re always interested in hearing dissenting opinions.

As such, for argument’s sake, we’ll examine the hypothetical notion of sidestepping as many third parties as possible to keep things close to the vest. Because, even without our solution, it’s possible to function as a loan broker (essentially a contact person for your customers) without supplying the funds yourself. And your business would gather the referral fees for any completed funding for which you’re responsible.

Let’s look at what you’d need to do to follow this path successfully. 

Necessary Steps For Lending to Your Business Customers Without Loanspark’s Co-Brand Solution

1. Develop a Strong Working Knowledge/Educational Foundation for Business Financing

Technically, you don’t always need any educational accolades to be a commercial loan broker. But technicalities and realities are two different things. And trying to be a loan broker without a firm grasp of the nuances involved will leave you reeling. 

Here are a couple of specific must-haves you need in your knowledge-base if you take the licensed loan-broker path:

  • Understand how books and accounting records are kept
  • Be able to assess a business’s financial health (this helps you describe info to lenders)

While you can DIY this type of learning, that’s an uphill struggle. You’d likely need college-level courses in financing and accounting to be adequately prepared. 

2. Obtain Some Viable Experience

Chances are, if you want to become a loan-broker/B2B business owner, you’d need to hire someone in-house to show you the ropes. That is unless you have time (and resume) to get employed by a financial institution to gain knowledge, which is likely a longshot. 

3. Become An Expert in Loan Processing

You must learn how to gather credit reports, appraisals, and other crucial information from potential borrowers. More importantly, this must be done in a streamlined, seamless fashion.

There’s then the need to analyze debt coverage ratios for your clients with spreadsheets. You’ll also have to develop a knack for reviewing tax returns and knowing the signs of a reliable candidate or potential red flags. 

Getting tired yet? Sadly, we’re only just scratching the surface for how to become a successful commercial lending broker.

4. Figure Out Licensing Red Tape

All states have varying licensing requirements when it comes to commercial loan brokers. 

Visit the website of your state’s licensing board or give them a phone call to find out more. Or get in touch with banking industry-based member organizations/local branches of the SBA.

Across most states, you won’t need a license, but some form of licensing is necessary for twenty states. You’ll have to be very thorough about this detail to stay out of trouble. There are potentially criminal ramifications for operating without a license in certain areas of the US. 

If you live in a state where licensing is required to be a commercial loan broker, you’ll need to follow the correct steps. This typically involves criminal background checks and fingerprint processing. Most often, you’ll be footing the bill for all of this.

Lastly, you might also have to pass an exam if the criminal background check wasn’t stressful enough. 

5. Create Your Commission Model

You’re basically a salesperson as a commercial loan broker, and any money you make will be commission-based. But you’re selling to two customers--the borrower and the lender.

Specifically, you don’t get paid when you find a willing borrower. Instead, you only get paid when a lender accepts your loan proposal and funds the borrower.

The commission you receive is a percentage of the brokered loan value. Some brokers earn up to 10% of the loan amount. But most often, the commission ranges between 0.5% and 4%, and it generally shrinks as the loan amount increases. 

You could also decide to charge an application feed for between $1,000 to $2,000.

Regardless of how you structure your commission, you’ll need to ensure it’s stated in no uncertain terms in your broker agreement. Both borrowers and lenders could be on the hook, depending on how you’ve structured everything. Again, though, this is a lot of work--considering you’re already running another non-lending business yourself. 

6. Find Lending Partners

You must find lending partners who can supply the funds and approve the loans. This means establishing relationships with banks, credit unions, private lenders, etc. 

Also, one isn’t enough--unless you’re not planning to lend to very many B2B customers. The more partners you have in your network, the better your lending services are because you can broker loans for different types of business-based customers.

Establishing this network might be one of your biggest road bumps, and you’ve already done enough work to get to this point. Imagine putting in the sweat and toil to learn the business and get licensed only to get stonewalled by every financial institution you try to partner with. 

7. Learn How to Qualify Leads

You probably understand lead qualification for your own business, but doing the same thing for loans is another ballgame. All the same, if you want your loan brokering venture to be profitable, this facet is an integral part of the process.

Thus, you’ll need to develop a templated system that helps you suss out the best possible business loan candidates. This way, you won’t waste your time on dead leads. Do you have the time, energy, and patience to create such a framework?

Images by Loanspark

Key Takeaway: Becoming a Lender is a HUGE Commitment 

Does being an independent commercial loan broker speak to you? Then go for it. We’re all about people taking on new challenges and following their dreams.

But realize commercial loan brokering is a career in and of itself. Taking this path will demand almost all of your time and attention. In which case, you’ll have to ask yourself what space in your schedule will be left for your own organization.

The only reason you considered becoming an independent commercial loan broker in the first place was to help your business thrive and grow. You can’t do that by not giving your organization the attention and TLC it deserves.

We understand the DIY spirit that runs through most entrepreneurs in the good ol’ US of A. It’s admirable. However, you can still honor the do-it-yourself spirit without completely upending your entire operation. You can still offer your customers business-lending solutions strictly using your brand while avoiding all the hassles and headaches. “How,” you ask? As we mentioned earlier, by partnering with Loanspark.

Leverage Loanspark as Your Business Lending Solution 

You can put in the same amount of work you’d need to earn a master’s degree to offer your clients business loans. Or you can purchase Loanspark’s ready-made solution.

The thing is--you’re still earning those very same commissions with Loanspark. It’s not like those revenues suddenly vanish--but all the extra work you’d have to put in otherwise does vanish. So why work harder when you can work smarter?

With Loanspark, your only focus is marketing and branding your business loans--an area in which you already thrive. 

Whereas commercial business lending and brokering is something we live, eat, sleep, and breathe at Loanspark. We know where to look for market fit and will only work with you if our solutions are ideal for your business’s circumstances. 

Contact us today with any questions about whether our co-brand lending services fit your business model. It’s time to give your customers the solution they need while taking your brand to a whole new stratosphere. 

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