August 17, 2022

Co-Branding vs. Referral Relationships

Incorporating funding into your business will lead to additional revenue through cross-selling financial products. Learn about Co-Branding and Referrals as revenue growth strategies.

Did you know your B2B business can provide much-needed financing to your clients?

Although financing options are typically associated with banks, credit unions, and online lenders — in today’s landscape, financing options are more frequently becoming products for non-financial companies.

B2B businesses can now seamlessly provide financing options to their clients, who can then either pay for the company’s services or use the funds to expand and grow. Accounting firms, informational internet brands, and B2B companies are able to supply their customers with loans. 

In fact, if you incorporate financing into your business, then your company can enjoy an additional revenue stream by cross-selling financial products.

There are two revenue generating strategies when it comes to implementing business lending into your product line: Co-Branding and Referrals

Which one is better for your business? Overall, Co-Branding provides more upside for you and for your customers than referrals.

Referring clients to third party lenders takes the entire funding process out of your company’s hands, removing your brand from a sizable chunk of the buyer’s journey. You lose control of integral touchpoints, and the cohesiveness of the exceptional brand experience you’ve designed gets disrupted.

You also lose control of reputational aspects. 

External loan agents only represent themselves and their own interests, rendering your organization powerless when something goes wrong. You could end up taking the brunt of someone else’s missteps, since you were referring your customers elsewhere.

Fortunately, Co-Brand business lending provides a solution to this problem. 

This seamless financing solution we offer at Loanspark, allows you to get your clients the funding they need without them ever leaving your brand’s ecosystem.


What Is Co-Branding?

To understand Co-Brand business lending, you need to understand the concept of Co-Branding on its own.

With Co-Branding, a business can purchase a ready-made product. There’s no need to invest in any real estate, technology, infrastructure, teams, or other related costs. The only thing your company has to focus on is finding the right co-brand partner and branding and reselling the new product offering.

The cost benefits of this type of service are clear. You can have a full line of your own branded products without dropping the ludicrous dollar amounts for all other expenses that come with building out a new product line from scratch.

Now, we’ll point out, Co-Branding isn’t a magic bullet. It’s like any other business venture. The success depends on product-market fit, driving traffic, and a sound pricing strategy. 

However, for businesses with exceptional marketing prowess and a thorough grasp of their captive client base’s needs, Co-Branding spells nothing but exponential ROI.

Co-Branding Goes Beyond Traditional Products in 2022

In the past, Co-Branding was more associated with traditional products that you’d come to expect in any brick-and-mortar location.

As the years have gone by, though, Co-Branding has become more of a force in the digital space. Specifically, software products are currently one of the most commonly Co-Branded global commodities. 

The new version of the manufacturing plant is any IT department, where genius minds develop backends for unbranded software, ready to be purchased for reselling. 

That’s where our Co-Brand Business Lending enters the equation. 

Should You Build Your Own Business-Lending Backend?

After reading the first part of this guide, it might seem wise to develop your own type of business loan product(s), getting rid of the middle man. We can’t fault you for looking for every angle to save money, but here’s where DIYing your own business-lending backend will lead you astray:

  • Software development can cost upwards of $250,000, never mind the time (700 hours on the lower end) your company will dedicate to creating such a product
  • You’ll have to navigate all the legal and regulatory red tape on your own 
  • There’s a need to find lending partners since it’s not financially feasible to lend the money yourself
  • Your whole team will be responsible for various customer service aspects of the loan instead of focusing on your primary services
Keeping Clients Within Your Ecosystem

By directly helping your clients thrive through Co-Brand Business Lending, you will help build your brand ecosystem where renewals, stickiness, and customer loyalty are practically guaranteed.

When we say “brand ecosystem,” we are discussing the entire experience your brand offers its clients through your media and channels, including but not limited to:

  • Social media
  • Email marketing
  • Traditional advertising
  • Consumer survey tools

Fine-tuning your brand ecosystem helps you and your clients by expanding your product portfolio. 

Your clients prioritize turnkey services. Why? Because according to studies, businesses value their time at $170 per hour. 

And that research is from 2016 before these current rates of record inflation. Today, the above dollar amount would equal $200 per hour. 

The vaster your brand ecosystem, the more needs you can meet for your B2B clients. 

Loanspark’s lending platform diversifies your brand ecosystem, giving your clients more of a reason to remain immersed in your messaging and services.

No matter how reliable a third-party, off-brand lender is, they’re far outside of your ecosystem. Your client goes from dealing with you and your people to engaging with another business. That leads to a competing brand message, and it comes across like you aren’t providing those turnkey solutions. Somebody else is stepping in to save the day. 

The fact that you’re keeping customers connected to your branding prevents other brands from moving in on your territory. But the spark provided by Loanspark goes far beyond muscling other companies out of the equation.

With Loanspark, the whole process is smooth and cohesive. A client doesn’t feel like they’re getting bounced around or having doors shut in their face. 

Instead, your clients get to stick with you from the moment they visit your website or contact you on the phone to when the loan funds are provided.

Image by Loanspark
Co-Brand Business Lending Empowers You To Be The Hero Your Clients Need

There’s a lot of room these days for you to be the hero for your clients as a B2B company. 

Loans meant for your clients during the pandemic were hoarded by large corporations. These massive enterprises essentially gamed the system, taking money off the table of small business owners, like your clients, who needed it most.

So, imagine one of these small businesses comes to you after two years of being left out in the cold by everyone who was supposed to help them. They don’t have the cash on hand to pay for your services or products, or to expand their business and make other investments, despite those products and services being an absolute necessity. 

Keep in mind that inflation in the US is at a 40-year high. Therefore, it’s even more likely than ever that members of your captive client base might need a little help with funding and cash flow.

When you offer those funds 100% through your branding, as you would with Co-Brand business lending, your clients will associate the whole borrowing experience with your company. You’re the savior.

Frankly, your company couldn’t ask for better brand positioning. You will be able to ensure that your customer is growing and succeeding because you helped them get funding, thus creating an ecosystem of success.

Loanspark Is Dedicated To Capturing The Cross-Sell

Sales have the potential to increase by 20% with cross-selling, while profit margins can shoot up 30% as a result of this time-tested tactic. Moreover, personalized cross-selling accounts for 26% of revenue, despite making up 7% of visits

First and foremost, Co-Brand business lending itself opens an immediate door to cross-selling.

You receive a fee on each deal funded per each client. These loans become a secondary product on top of what you primarily sell. 

So, when your customers apply for your business loans to make a purchase from your primary product selection, you’re selling them two products instead of one.

Then, even digging deeper than that first layer of cross-selling, there’s more proverbial gold to mine. 

Since your loan applicants stay within your ecosystem, their journey isn’t disrupted by another brand. They remain engaged with your company. Thus, they have more opportunities to learn about your products and services. That’s a highly conducive environment for those clients to make additional purchases once they procure their funding. 

Also, the average small business loan size is $658,000. Obviously, many businesses will borrow less than that. Still, even loans in the 4 and 5 figures can give small companies a new lease on life. 

Due to this burst of optimism spawned by the procured loan amount, your clients have the impetus to invest in more products and services than before. 

Furthermore, since our team operates under your brand, we ensure that the rest of your team focuses on your core products and services. Each of our team members applies their well-honed tactics to drive cross-selling opportunities for your business. 

It’s then unsurprising that, unlike simple loan referrals, adding branded business lending services to your list of products generates a 25% increase in revenues on average. 

Loanspark Drives Customer Loyalty And Harnesses The Power Of Personalization 

Keeping customers in your brand’s ecosystem is naturally going to drive loyalty. It’s about the personalized attention you pay to customers. 

To the above point, McKinsey cites how a focus on personalization increases renewals, and reduces marketing costs between 10% and 20%.

How does Loanspark harness the power of personalization? When your clients are pre-approved, they get a list of financial products they’re eligible for. These are suggestions specific to your client's business needs.

Also, the very nature of keeping the borrowing process specific to your company is deeply personal. It shows clients you’ve taken the initiative to see them through the borrowing process. 
Offering Business Lending-as-a Service (BLaaS) is direct proof that you’re invested in your client’s success and financial wellbeing. That’s the definition of making things personal. You’re going beyond providing a primary service or product and giving them all the tools necessary to leverage all that you offer.

Furthermore, you have given yourself an additional revenue stream and offering that your competitors don't have.

B2B Loan Referrals Won’t Make You The Hero Your Clients Need

Your clients will appreciate it when you refer them to a lending resource. They know you want what’s best for them.

Still, small business owners don’t always have the time to be sent elsewhere. The research, the gathering of the documentation, figuring out which lenders and options are the most cost effective - all this takes away from business owners running their business and day to day operations.

In many instances, these companies’ survival depends on getting money ASAP. 82% of small businesses fail because of poor cash flow, while 29% simply run out of cash.

These companies need money and are on the lookout for every opportunity to get some financial assistance. They’re more than willing to take the risk because they believe in their products, services, and brands, just like you believe in them.

Unfortunately, the sad truth is that small businesses haven’t received the support they deserve from banks or the government, especially during the pandemic. 

While referring your cash-strapped clients to various lenders is helpful, it will also be messy, time consuming, and cumbersome.

Conversely, offering a B2B loan entirely under your branding will make your company the hero that stepped up when your clients needed you most. 

Referring Away Means Giving Up Control

When you refer to a lender or broker, you have no control whether or not your customers get the funding they need. As such, if your customers don’t get funding, and as a result must downsize and cut your services, you will be surprised and blindsided.

Overall, this is a theme that you will notice with referral relationships. You will lose control over your relationship with your client.

While you might have a friendly or cordial relationship with a given business lender, they aren’t steeped in your company culture. They don’t have the same investment in your products or services as your in-house or our co-brand partner team. 

You can’t rely on third-party referral lenders to do right by your brand because they aren’t directly representing your organization. 

We’ll reiterate that a referral business lender or broker generates results with no effort from you. However, they aren’t necessarily committed to the long-term growth of your company. Really, all they care about is the applicants coming their way and the development of their own business.

They have no incentive to keep your clients loyal to you.

Also, go all the way back to the year 2000, and you’d be shocked by the shortness of the human attention span, which was 12 seconds. But that number has only lessened over the years, dropping to 8 seconds in 2021.

As such, you’re fighting an uphill battle when getting leads and prospects to stay on your website, read your newsletters/blogs, or engage with your social media accounts.

The world is filled with more distractions than ever, from the dings of text messages to the not-so-ambient hum of podcasts to seamless access to Netflix. 

Your brand is competing with those stimuli, never mind the paid banners for other companies on your websites, acting as a lure to draw leads away from your content.

That’s where Co-Brand business lending makes all the difference. 

The entire process exists under your brand’s umbrella. No disruptions. No conflicting messaging. The loans are a product or service like everything else you sell, applying your brand’s voice, colors, and big-picture messaging.

Images by Loanspark
Referrals Offer Less Revenue GrowthWhen you refer clients, you won’t receive as much upside.

You’d likely collect a small referral fee, but you will not have established a consistent revenue stream. You won’t receive the full benefit of co-brand partnerships: making money without the extra hours of sweating and toiling.

In contrast, working with a company like Loanspark will allow you to have peace of mind that your revenue stream will continue to grow. 

Referring Equates To Poor Customer Service 

When you refer, you are not taking care of your customers. You are sending them away into a messy world of lending. However, when you partner with Loanspark, we take care of everything for you and your clients.

Think of all the work you’ve done to cultivate a relationship with your client. Even if we’re talking about a prospect, you’ve carefully crafted a buyer’s journey that has them on the brink of converting.

Then, imagine that you refer a client to someone else for a loan after developing a rapport and nurturing these relationships. All of that value, passion, and conscientiousness you’ve displayed is now in an off-brand loan agent’s hands.

We’ve gone through the risks involved in removing someone from your brand ecosystem. But view that through the lens of the equity you’ve built. 

You deserve all the benefits and goodwill, such as a stronger client relationship, that come with offering business financing to your clients and prospects. Not just a small fraction of it.

In other words, why accept a small piece of the pie when you can enjoy the whole thing? 

Until now, unless you could build your entire backend, which is rife with headaches, you could only reap the fringe benefits associated with loan agent referrals. However, with Loanspark’s Co-Brand business lending solution, you enjoy all the advantages, including high-value client relationships that last decades.

Why Co-Brand With Loanspark?

When you align with Loanspark, your business becomes our business. That translates to your reputation being our reputation and our standards for excellence being your standards for excellence.

Here are a few unique ways we help our partners. 

Regulatory Compliance: We’ve Got You Covered

A third-party referred lender isn’t connected to your company the way we are. So, they’re not really all that worried about the overall perception of your organization. Suppose these external lending agents happen to slip on their regulatory and compliance knowledge. In that case, the ramifications it could have on your customers’ business, and your business since you referred them, don’t quite compute for them.

Be mindful that we aren’t doubting the intentions of any outside lender. In their minds, they might be above-board. But regulations and laws are tough to navigate. They vary state-to-state, and the best practices are steadily shifting. It’s easy to make mistakes if you just so happen to take your eyes off the prize.

Unlike an outside loan provider who doesn’t have skin in the game, Loanspark is relentless with our desire to keep up with best practices for business loans. 

We’re compliant and licensed to complete loans in 47 states. Our regulatory reviews are frequent, keeping our ears to the ground and in tune with even the most minuscule changes.

It’s absolutely pivotal that your business aligns with a lending partner who is precise about compliance in a day and age where small business lending is under a legal microscope. You don’t want your business to come across as one of “the bad guys.” You want to be the brand that’s got it’s t’s crossed and i’s dotted, all in the name of helping small businesses thrive.

Image by Loanspark

You Don’t Need To Worry About Funding

Financing other businesses can sound like a scary proposition. Who’s got that kind of money lying around? And what happens if your clients can’t pay you back?

As such, most companies like yours have generally been giving referrals to third-party lenders. After all, when you refer people to another lender, the responsibility of providing the money is shifted to someone else.

But Loanspark takes care of the funding problem for your business. We’re partnered with a long list of reliable lending partners that offer various financing options for your clients, meeting a diverse list of needs and preferences. We created this marketplace of lenders, and provide it as a service to our co-brand partners. This way you get the benefit of our marketplace-as-a-service, where you can customize your offering to your customers based on what financial products you want to offer.

This specific element is what makes our business lending service so unique. You aren’t paying anything more than a small setup fee and monthly subscription. So, you can offer different lending programs to a limitless number of clients without worrying about where the money is coming from. We ensure our marketplace has all you and your customers need.

We’re not joking when we say a limitless number of clients either. When your business provides financing, it broadens your appeal massively. The current economic environment has small businesses seeking alternative financing options. 

Banks approve just under 60% of small business loan applications. That’s 40% of applicants left reeling and looking for another way to obtain much-needed funding.

Keeping in mind that 31.7 million small businesses in the US applied for loans last year. That means millions upon millions of small businesses are looking for the loans your company can be offering.

You won’t have to sweat the idea of the money-well running dry. Once a client is approved, there’s always a lending partner or bank with the available funds.

On top of everything else, your client doesn’t necessarily have to purchase anything else from you for these loans to prove fruitful. Beyond the brand recognition and benefits to your reputation, you’re collecting fees because our loans are your products. So, even though you aren’t responsible for funding, you’re still getting a cut. 

Seamless Technology Streamlines The Lending Process

The standard business lending process is intensive, with many aspects leading to a clunky experience for your clients. 

Loanspark’s proprietary technology is unrivaled and state-of-the-art, beginning with our loan origination system (LOS). The dedicated team at Loanspark processes, underwrites, and handles the funding, all in the name of your brand doing right by your clients. 

Loanspark’s point-of-sale (POS) website integrates with our LOS, so they function in real-time harmony.

Combining those two elements with our online application portal and other processing integrations allows for fast decisions and quickly-provided funds through online payments.

With all the above information top of mind, consider that it takes an average of 60 to 90 days to complete the average small business loan. By offering alternative speedier loans, you’re soothing a specific pain point for your clients who need funding, pronto. 

That level of convenience and seamlessness differentiates you from the banks who’ve likely let your clients down. You’re proving that your brand values these peoples’ time, conveying your conscientiousness and empathy. 

To the above point, 86% of survey respondents say conveying empathy as a brand is conducive to building loyalty.

Now, imagine you’ve partnered with a non-Co-brand business lender who’s just as efficient as Loanspark (yes, we’re willing to admit it’s possible, no matter how unlikely). While some of the credit and goodwill might come your way, it’s divided. That off-brand lender gets to move in on your territory. And that’s not a knock on them. They have a business to run, after all.

But with Loanspark, while we manage everything, you get all the glory. Our reward is your success and happiness with our services. It is your company capital services, powered by Loanspark.

It’s Time For Your Business To BLaaSt Off With Loanspark

You go out of your way to provide personalized, comprehensive services to your clients. Since you uphold that commitment to detail and personalization, you should hold your partners and service providers to those standards as well.

Loanspark’s personalized approach reflects your core beliefs. It begins with how we serve you and your team, then extends to your clients, who’ll feel appreciated, valued, and satisfied that their every need has been met. From there, they’ll keep coming back for repeat business. 

The benefits will be wide-sweeping and jaw-dropping, all without your company putting everything on the line. Loanspark offers you a headache-free BLaaS solution that drives profits. 

It’s time to embrace Loanspark’s diverse, one-of-a-kind Co-Brand business lending product. Your business will thrive, and your clients will relish the opportunity you’ve provided. From there, you’ll be on the leading edge in your industry, BLaaSting off far and away from the competition. 

Contact us today, and take your first step toward a wealthier, financially robust tomorrow. We look forward to hearing from you and learning the ins and outs of your business.

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