7 Common Mistakes Factoring Brokers Should Avoid

12:46 18 January in Blog, Broker Resources

As a broker in the factoring industry, you know that business development takes a lot of time and effort. So, when you find a potential client, you want to be sure you are prepared. It will save you and your client a lot of time and help to avoid mistakes that may result in lost business.

Don’t let the excitement of landing a prospect divert you from the preparation successful factoring brokers use to develop business.

Here are 7 common mistakes factoring brokers should avoid in order to close more deals.

Not Networking Enough

Prospecting for new clients by contacting leads from call lists, internet searches or other data mining techniques is time-consuming, tedious, and has a low probability of success. Make sure you are investing enough time networking to increase your chances of locating and developing clients.

Joining professional, civic and fraternal organizations gives you the opportunity to network with CPA’s lawyers, business executives and owners. Networking can result in leads and contacts for new business prospects. It helps you to learn about a prospect so the contact goes smoothly. Contacts developed through networking are more likely to be successful.

For additional discussion of networking, please read: Tips to Generate Lead Opportunities as a Factoring Broker

Using Outdated Technology

Many new business opportunities come in the form of start-ups and early-stage companies. These business owners are often tech-savvy entrepreneurs, who conduct their business and communications on the internet and smart phones. If you want to pursue these prospects, you should have a website and a social media strategy to attract and draw entrepreneurs to your services.

Factoring transactions are now in a digital and electronic format. You need to have the necessary technology infrastructure to effectively do business with clients and factors. Make sure you have up-to-date technology for electronic transactions and communication by voice, text and email.

Not Using a Script

When you connect with a prospect don’t just wing it when you make a presentation. Based on what you know about the client, prepare and practice a script for discussions. Whether you are on a Zoom conference, Skype or a phone call, a script will help the discussion flow more smoothly and ensure that you have covered all the important points. A script will also help you to avoid digressing and making statements that are not relevant to the factoring program and may confuse or mislead the client.

Clients appreciate well-organized presentations that don’t take more time than they should. Using a script will improve communication, reduce back and forth, and avoid unnecessary emails which slow down the due diligence and underwriting process.

Not Knowing a Prospective Client Well Enough

Not knowing a client well enough can leave you open to surprises in the due diligence and underwriting process that may result in the factor declining the business. Your time is wasted unnecessarily and it may affect your relationship with the factor and the client.

Prepare a thorough client profile and make sure that you understand the industry, business and client’s customers. Review the client’s financial strength, credit history and business reputation. A little homework will help you avoid misunderstandings and delays.

Not Speaking the Lingo

Like other forms of financing, factoring has terminology that has specific meaning. Not knowing the correct factoring terminology can create misunderstandings and problems with the client and factor. For example, confusing PO financing with factoring. These two financial products are very different and yet many brokers will use the terms interchangeably. You should understand and use the same terminology the factor uses as well as avoid using lending terms that do not apply in the context of factoring.

For additional insights on factoring terminology, please read: Common Terminology Used in Factoring

Create False Expectations

Statements like “When you factor your invoices, you can literally receive cash the same day you invoice”, or telling a client their customers can be automatically credit approved for a certain credit line can give the client false expectations. Misleading statements may cause confusion and strain your relationship with the client and the factor which can ultimately be a deal killer.

Avoid misleading statements on the turnaround of transactions and the length of due diligence and underwriting. Never provide a client with a proposal; that is the factor company’s responsibility. A factor will end up needing to restructure the program you presented, which further hinders the closing of the deal.

Handing Off the Transaction at the Improper Time

Speak your piece, then be quiet. Once you have found the client a suitable factoring company for placement, it’s important you hand the transaction off to the factor at the proper time. Many times brokers will remain overly engaged with the deal and some may even continue to shop it around to other funding sources. More parties involved can mean more confusion and it creates inefficient communication. This slows down the due diligence and underwriting process which can ultimately prevent the transactions from ever closing. Follow the factor company’s directive when they tell you “We got it from here.”

———

Avoiding these common factoring mistakes will save you time, increase your success in developing and closing deals, as well as enhance the relationships you have with your client and the factor. Putting in the time upfront to increase your knowledge and hone your skills will return the investment many times over.

 

Common Terminology Used in Factoring

14:48 10 January in Blog, Broker Resources

Invoice factoring is a widely-used form of working capital financing. Like all forms of financing it uses terminology, and this terminology has specific meaning when used in a factoring context.

If a client of yours is thinking of using factoring to increase their working capital and accelerate their cash flow, it will be easier for the client to understand the terms of the factoring agreement if the client knows the meaning of factoring terminology.

The following list of commonly used factoring terminology will help clients be more comfortable when they discuss a factoring agreement with factoring brokers and factor personnel.

Invoice Factoring: A form of debtor financing that businesses use to accelerate cash flow by selling their invoices to a third party (factor) at a discount. Businesses receive cash immediately for their unpaid invoices instead of waiting for their customers to pay.

Advance Rate: This is the percentage of the invoice amount that will be advanced. The percentage depends on certain criteria including the client’s customers’ credit quality and financial condition. The advance rate percentage is generally around 70% – 80% of the gross invoice amount.

Advance: This is the amount of money that the factoring company advances to a client when it buys an invoice.

Account Debtor:  A client’s customer.  This is the business that owes payment on a client’s invoice.

Customer Credit Limit: The maximum amount of credit applicable to a specific Account Debtor.  A client may be unable to receive an advance against an invoice if their customer’s credit limit has been reached.

Factoring Fee: The fee the factor charges to factor a client’s invoices. The fee is expressed as a percentage charged on the face value of the invoice.

Funding Period: This is the time period that begins when the factor purchases an invoice and ends when the Account Debtor pays the invoice.

Rebate: The invoice balance, fewer fees, that is deposited into a client’s account when the invoice is paid.

Factoring Agreement: The agreement between a client and the factor. It will cover all aspects of the program including fees, advance rates, credit limits, and other details.

Due Diligence: This is a review of a client’s and a customer’s financial backgrounds to determine eligibility for factoring.

Recourse Factoring: The client is responsible for paying the invoice if their customer fails to pay the factor.

Non-Recourse Factoring: The factor absorbs any credit losses that result from an Account Debtor not paying an invoice. Fees for non-recourse factoring are generally higher than recourse factoring, and credit limits may be lower.

Client: This is the business owner that wants to sell its invoices.

Notice of Assignment: A notice that is sent to an Account Debtor informing them that the invoice has been assigned to a factor.  It also informs the customer of the new address for payment.

Aging Report: A report that shows how long accounts receivable have remained outstanding.

Credit Terms: These are the terms of payment that appear on your invoice, such as Net 30 Days or Net 60 Days, which is payment due by 30 or 60 days after the invoice date.

Collections: These are payments the factor receives for invoices that were factored.

Lockbox: A bank cash management system designed to receive payments by mail and quickly deposit them into the factor’s account. Lockbox systems usually provide scanning of documents, online viewing and cash management systems.

Bad Debt: A bad debt is the unpaid balance of an invoice that is deemed to be uncollectible. A bad debt is either written off or referred to a collection agency or lawyer.

Credit Insurance: An insurance policy that covers the potential loss due to non-payment of an invoice.

The following table compares lending terminology with factoring terminology to make it easier to understand the context that factoring terminology is used in.

LENDING TERMINOLOGY   FACTORING TERMINOLOGY
Loan Agreement Factoring Agreement
Loan Factoring Facility
Loan Amount Advance Amount
Lender Factor
Borrower Client
Interest Fee/Discount
Loan Payments Collections

Understanding factoring terminology will help your clients ask the appropriate questions when deciding which factoring company to work with and if factoring is the right solutions for their needs. Factoring can provide the additional working capital clients will need to finance the business opportunities that will arise in 2022 as the economy continues to grow.  Capstone has the experience and capability to tailor a factoring program to meet your client’s working capital needs.

Tips to Generate Lead Opportunities as a Factoring Broker

13:00 25 October in Blog, Broker Resources

New business development is crucial to being a successful factoring broker. It’s essential to keep your business pipeline full and growing. Generating lead opportunities and convincing others of the value of working with you is the first step to keeping your book of business flowing.

Focus on Your Market Niche

From construction trades to consumer products, from manufacturers to staffing companies, from suppliers/ distributors to publishing, invoice factoring can quite literally be applied to any industry and everything in between.  Choosing your niche and focusing in on it essentially sets the stage for your brokerage as well as future business relationships.  Focus on companies that need a knowledgeable, professional intermediary to help them obtain alternative financing solutions. Companies that may be less sophisticated financially, and do not have the depth of in-house financial expertise to take advantage of invoice factoring.

Leverage Your Knowledge, Experience, or Connections 

Do you have knowledge, experience, or connections in certain industries? These touchpoints could be through education, work experience, family, or friends. Leverage your touchpoints to identify lead opportunities.

Utilize Networking Opportunities

Professional and social networks can be an excellent source of lead opportunities. It’s usually better to use networks to promote yourself instead of direct selling. The network connections you establish can become ambassadors for your brand who have exposure to many more lead opportunities than you can reach by yourself.

Some examples of networks you can develop to identify leads include:

Industry Associations

Many industries have associations to promote member interests. They often have different categories of membership or affiliation. This allows vendors and service providers to participate in association activities. They can be great opportunities to network with prospective clients. Certain associations will sometimes sponsor presentations on products and services that are important to members including financing and alternative lending solutions.

Professional Groups

Like industry associations, professional groups such as CPAs, lawyers, CFOs and engineers belong to groups, which may allow service providers some form of affiliation to benefit the members. Better yet, you may qualify to be a member of these groups yourself based on your education or work experience.

Personal Associations

Alumni associations, fraternities/sororities, religious organizations, social clubs, and hobby groups can all be sources of lead opportunities. Associations can be a strong connection for building networks.

Chamber of Commerce

Membership in your local Chamber of Commerce is a great vehicle for meeting and networking with CPAs, lawyers, bank loan officers, business leaders, and prospective clients. Chamber membership usually has a cost, so see if you can attend as a prospective member to determine if it makes sense for you.

Angel Investors

Angel investors provide capital to start-ups and early-stage companies. There are angel investor groups around major metropolitan areas and they typically hold regular meetings where small business entrepreneurs “pitch” the opportunity to invest in their company. These meetings can be great opportunities to meet prospective clients, and angel investors who can be a source of business referrals.

SCORE

The Service Corp. of Retired Executives (SCORE) provides assistance and mentoring to small business entrepreneurs. SCORE chapters hold seminars and workshops on topics that benefit small business entrepreneurs including financing. Be sure to attend these events to network with prospective clients and SCORE counselors.

SBDC

Small Business Development Centers (SBDC) are usually partnerships between the Small Business Administration (SBA), area universities, and local government business development agencies. SBDC’s provide training and support to small business entrepreneurs. They also hold educational workshops for business owners. SBDC’s can be a great place to meet prospective clients, and network with SBDC staff.

Data Mining

A vast amount of information is available on various industries in databases. Some information may be available free to members of industry associations, but most data must be purchased. The data may be available for download to your computer or by access to a cloud-based website.

You can use various commercially available software solutions to manipulate the data in many ways to help you “mine” for lead opportunities.

Develop Your Online Network

Many new businesses today are run by “tech-savvy” people, who rely on the internet to communicate and run their businesses. It is essential to develop your online network to identify lead opportunities.

Website

A website is your headquarters in the digital world. An online office where you meet and greet lead opportunities, and tell them about you and the services your business offers.

The landing page on your website is where potential leads land after being directed from an ad you’ve posted on the internet, or from a link in your social media posts. It provides an opportunity to showcase your business and convert the visitor into a lead.

Social Media

Social media websites such as LinkedIn, Facebook, Twitter, and Instagram offer additional opportunities to present your business and convert visitors to lead opportunities. Visitors can click on a link to your website for additional information.

Webinars

A webinar is a live discussion online of topics of interest to prospective clients. Your audience needs to sign up to attend your webinar, so you can follow up on lead opportunities afterward.

Use your online network to provide information of interest to prospective clients. It is a much easier and more efficient way to generate lead opportunities. There are many ways to identify lead opportunities. Use your creativity to identify the approaches that will work best for you and for more information on developing as a broker, visit our broker resources.

invoice factoring partner

How Brokers Can Identify the Right Invoice Factoring Partner

07:19 13 March in Blog, Broker Resources

As a financial services broker, identifying the right partners is essential. Too often, brokers offer leads to providers of financing and find themselves on the outside looking in. Therefore, identifying capable and trustworthy invoice factoring partners early in your career is essential.

Most brokers are looking for an ongoing relationship that does not cost them future revenue; exceptional communication between the funding company and themselves; training when needed; and tools to help them maximize their business potential.

This model holds regardless of the amount of business the broker is referring and which products they need to meet the needs of their clients. That is why for years, brokers have learned to rely on Capstone.

Capstone Values Broker Relationships

If your business focuses on small companies and embraces minority-owned firms, you need a trusted partner. Your clients’ needs come before anything. You often seek opportunities to provide them with unique methods of obtaining the cash they need to keep their business functioning. Some of the ways Capstone demonstrates their commitment to broker relationships include:

  • Custom packages for your clients – every customer has unique needs and we will work with you and with your client to make sure we offer them a package that meets those needs.
  • Local services – regardless of where your client is located, we can help.
  • Regular commission checks – if we are doing business with your customer, you will get a regular commission check from us.
  • Training – you need never worry about any uncertainty with our products. We provide you with training, educational materials, and brochures, so you know which products you can safely offer.

If you are looking for a partner you can trust to help you grow your business by assisting your customers, today is the day to reach out to Capstone. Contact Capstone Capital Group today at (212) 755-3636 and see how we can enable you the opportunity to grow your own business while providing your clients with the financing they need to grow their businesses.

business finance broker investing

Business Tips: Invest in Brokers

09:38 14 October in Blog, Broker Resources, Business Funding

Some finance companies prefer to work directly with clients and avoid working with brokers. Capstone takes a different approach to dealing with brokers, we invest in their success. There are practical business reasons to taking this approach with a financial broker including the opportunity to develop a long-lasting relationship.

Why Brokers Matter to a Finance Company

The most effective marketing program will not reach every person who could use the type of financing you are offering. Simply stated, working with brokers makes sense for every financial institution since it grows their potential market. Brokers can direct the clients who best fit your market directly to you and making sure they are well-educated in your products and processes makes good business sense.

Investing in Brokers Makes Business Sense

New clients help you grow your business. Reaching out to financial brokers is a plus because many businesses use brokers to help them find necessary business services. If you take the time to train the brokers about your processes including how you review applications, what financial criteria you use to determine eligibility, and the types of businesses you typically fund, you will spend less time on new applicants. This allows you to continue growing and targeting those businesses you are most likely able to help.

Relationship Building and Financing

Before a company feels confident dealing with a new financing method or financing company, they must feel comfortable with the people they are dealing with. In many cases, a company will have been working with financial brokers on an ongoing basis to deal with a broad range of financing needs. Given they have an established relationship, clients are more likely to feel confident about going to a new source of funds when the broker has an existing relationship with them.

How to Invest in Brokers

Investing in brokers is about education more than money. While every finance company should agree to basic principles such as ongoing fees to brokers if their client remains an active borrower, there are other ways to invest in these relationships. At Capstone, we are committed to our relationship with every broker and because of that, we offer the following to every broker we deal with:

  • Training – we believe a well-trained broker can grow their own business, their client’s business, and our business. That’s why we spend time training each broker on the products and services we offer.
  • Educational Materials– we make sure each broker we work with has the educational material they need to inform themselves, as well as their clients about the range of products we offer.
  • Brochures – while word of mouth advertising is always the most direct, we also understand having high-quality printed materials available for customers is sometimes a necessity. Our brochures are available to every broker who wants them to share with new brokers or with their clients.

Once a broker has started working with Capstone, they get a monthly accounting of all activity from their clients. We believe this type of transparency is important as it helps us develop strong relationships across our broker base. Additionally, we put no caps on a broker’s earning capacity: As long as their customer uses a Capstone product, the broker receives a commission on every dollar we finance. We believe this is a winning solution for us, for clients and for the brokers who represent those clients.

Capstone Group has a variety of programs designed to help brokers succeed because we believe brokers help their clients succeed. A successful broker helps raise the viability of their clients, and we believe our relationship with brokers is one of the reasons why we have continued to be able to supply customized solutions to small and mid-sized businesses across the United States.

7 Things Clients Look for When Choosing a Brokerage

7 Things Clients Look for When Choosing a Brokerage

15:16 24 July in Broker Resources

Working with financial intermediaries offers business owners many advantages. Primarily, a financial intermediary can help you identify the right funding mechanism for your needs. Whether a business needs help with leasing equipment, securing lines of credit, or help identifying a financing partner, an intermediary can be an asset. However, as a financial intermediary, you should understand what clients are looking for and make sure you are meeting their needs.

1. Experience Matters for Clients

One of the primary reasons a business owner turns to a financial intermediary is their lack of knowledge about financing options. Experienced financial intermediaries help business owners understand what types of financing they might qualify for, what the costs associated with various financing options are, and what type of financing is best suited for their needs.

2. Industry Knowledge Matters to Clients

When a client is interested in working with a financial intermediary, they are going to ask about specific industry experience. Having experience in construction financing is helpful if you focus your marketing efforts on dealing with contractors and sub-contractors. If you have a lack of experience, you may not be able to advise your clients of the best options for their business model.

3. Communication Matters to Clients

Business owners have numerous challenges which they must deal with on a regular basis. When they are working with a financial intermediary, they depend on them for clear and regular communication. No business owner wants to discover weeks into a funding proposal they are missing documents, or they have no chance of securing financing. A financial intermediary must always remain in communication with a client, and make sure they are being honest with them regarding their potential for securing financing.

4. Loan Products Matter When Selecting a Broker

If a client goes to a financial intermediary, they expect they will have a menu of product offerings. If a financial intermediary is dealing only with local banks, the client is facing the same limitations and challenges as if they were going to the bank themselves. Being able to offer a broad range of products is important for growing your business, and to serving clients most effectively.

5. Competitive Rates are Important

Business clients do not want to pay any more than necessary to secure the financing they need to maintain their business. For a financial intermediary, this means not only must they offer a variety of products, but those products must be competitively priced in order to secure new clients.

6. Competitive Fees Will Help You Win Clients

Financial intermediaries who charge a reasonable fee will nearly always do better than a financial intermediary who has fees that are typically above industry standard. Clients understand when they are working with a financial intermediary they are paying for services but since they are cost-conscious, they do not want to overpay for these services.

7. Value of Time for Clients

Business owners are often facing time challenges when they are searching for funds for their business. This means a financial intermediary must be able to review the client’s documents, understand their funding needs, and come up with workable solutions to meet their needs. A skilled financial intermediary knows where to turn to meet their client’s unique needs. This is an important skill that is developed through experience and industry knowledge.

Business owners in underserved industries often face unique issues securing financing and as a financial intermediary, it is important you know there is help available. Whether your client is part of a minority-owned business, a contractor or sub-contractor, or a staffing company, Capstone is available to help. You can feel confident that regardless of whether you refer one client, or one-hundred clients, you will always be paid your origination fee for as long as your customer continues to do business with Capstone. We offer a full range of products, we offer financing to business owners who are in industries with unique financing challenges, and we are committed to helping financial intermediaries grow their businesses. If you want to learn more about how we support our referral network and their network’s clients, contact Capstone Capital Group today at (212) 755-3636 and see how we can help you grow your business

Best state to open your loan brokerage

14:24 07 May in Blog, Broker Resources

If you are considering opening a new loan brokerage, like any other business, location matters. Some areas may offer more opportunities than other, regardless of what type of business you are planning to launch. For a loan brokerage, it makes sense to establish a business where there are numerous businesses starting, and a shortage of access to capital.

Various Metrics Available for Loan Brokerages

While North Dakota, Utah, Florida, Texas and Nevada show the highest average growth in new business startups, some of these states already have the most accessible financing available. For example, North Dakota and Utah along with Iowa and South Dakota have been rated by Wallet Hub as the states with the most accessible financing.

However, if you look at Florida and Nevada in this same report, they rank near the bottom in terms of accessibility to financing. Keep in mind, in order for a business to thrive, they need working capital. Keep in mind, for a small business, capital is a must. Before a small company can grow, they need to increase their market share, hire employees, may need additional inventory, and they will likely need equipment. That means they are the ideal target audience for a new loan brokerage.

Regulatory Requirements May Pose Challenges

Before you decide where to locate your business, you should research the requirements for loan brokers in the state. Some states may require individual licenses as a loan broker. If you live in one state, and you are doing business in another state, you may face other regulations as well. Careful review of a state’s financial regulations will help you determine where you can make the most difference, and where you may be subject to fewer regulations.

Borders Not the Barriers They Once Were

For those commercial loan brokers who are not interested in relocating to Florida or Nevada, all is not lost. Thanks to and ever-changing technology landscape, it is now possible to do business across the country as seamlessly as we once did business face-to-face. Many direct lenders make loan applications available online and thousands of lenders welcome loan requests from brokers regardless of where they are located geographically.

Your Most Important Goal: Meeting Client Needs

Your client’s goals will be the most important aspect of your business. Regardless of size, all businesses need working capital. This capital may be used in various ways including:

  • Increased marketing efforts
  • Paying employees/hiring new employees
  • Meeting regular obligations such as rent of space
  • Purchasing equipment
  • Ensuring proper inventory

As a loan broker, your task will be to match your client’s needs with the right lender, and the right capital type, regardless of where you are doing business. This is where Capstone can help.

Valued Relationship with Brokers

Many lenders offer a one-time referral fee to a loan broker who brings in new business. They are initially excited to do business with you because it means they have a new client. Oftentimes, once a relationship is established with your client, the lending institution turns their back on the broker who referred them. That’s not how Capstone does business — we nurture loan brokers who refer business to our firm. In addition to paying you a commission for the life of our relationship with your client, we also offer guidance in other ways. For example, Capstone offers those who refer business regular access to various training and other resources to help them grow their business. We believe that the more successful you are, the more successful we are. Therefore, in addition to regular accounting of all business transactions and regular commission checks from your clients, you can turn to us for assistance in expanding your loan brokerage.

If you want to learn more about how Capstone supports their referral network, contact Capstone Capital Group today at (212) 755-3636 and see how we can help you grow your business, and provide your clients the financing they need.

 

3 Things Brokers can do to Leverage Lower Rates from Lenders

12:05 01 May in Blog, Broker Resources

Interest rates are one way a broker can stand out from others in their field. With overall interest rates rising however, getting the best possible loan rates from lenders presents some interesting challenges. This is particularly true as lenders often shy away from making small business loans, preferring those loans where a company is well-established, has a proven track record, and has sizable assets. The irony is these are the same firms which may not need a loan.

As a finance broker, you are probably dealing with a company who may be struggling to obtain capital from their local banks. This means you have to evaluate your client’s needs, identify the right lender, and negotiate the best possible rate to meet their needs with that lender. Finding the right leverage when negotiating with a lender isn’t always easy but there are three things you can do which may help.

1. Identify the Business Strengths

When the business you represent has strong contracts with customers, has a sterling collection record, or has a low debt ratio, you have the ideal leverage to negotiate a lower interest rate. These are all plusses which can be used in discussions with a lender. Make sure you highlight these strengths when you submit a loan package because they could help you get a lower rate.

2. Offer a Lender Collateral

For some borrowers, collateral is the best leverage they have. For example, a company that has valuable equipment may be able to live with a lien on the equipment. This works best when a company does not have to worry about upgrading due to technological advances. Many lenders feel more confident lending when there is a backup plan in the event of default. This may also be helpful when seeking a lower interest rate.

3. Consider Lines of Credit vs. Loans

Lines of credit often have lower interest rates. They also offer other benefits including your client’s ability to use funds on an as-needed basis. The company pays interest only on the funds which they use, and the balance of the loan remains on deposit with the bank until it is needed. The added benefit of this type of financing is the customer also makes payments only on what they are using.

Consider an Alternative to Bank Loans

Keep in mind, lenders are in business to make money. To maximize their profit, they may be offering a variety of programs with slightly higher interest rates than you might otherwise expect. What many financial brokers overlook is the ability for their customers to get the money they need without having to take on the additional burden of debt. This can be accomplished through the process of invoice factoring.

Factoring invoices can provide numerous benefits to your customer. Some of those benefits include:

  • No Debt– factoring means a business owner has no need to borrow money. Lack of debt improves the business’s balance sheet. Not taking on debt also means there is no loan servicing to be concerned about meaning the business is not worried about having money to make loan payments every month.
  • Transfer of Risk – instead of worrying about collecting money from a client, when a business factors an invoice, they are transferring the risk of the collections from themselves to the factoring company.
  • No Hidden Fees – unlike a bank loan, you will not incur a late fee for payment nor will you incur a penalty for paying early. If a client pays the factoring company before the invoice is due, it merely improves your customer’s standing and strengthens their position the next time they opt to factor an invoice.

One of the numerous benefits of working with a factoring company is interest does not accrue on an outstanding balance. In fact, your customer will know up front exactly how much they are going to pay in fees. Another significant benefit is time: You never have to wait weeks, and in some cases months, for an answer. In most cases, you will know within a short period of time whether a transaction is approved, and your client will have the money they need within a few business days.

If you have clients you feel could benefit from invoice factoring, you should contact Capstone immediately. We’re committed to working with brokers across the country who have customers who need capital to keep their business operating. We can help you get your customer the money they need without worrying about the burden of added debt. Contact one of our account representatives today at 347-410-9894, reach out to us via email at [email protected] or fill out our simple online contact form and let’s see what we can do to help.

4 Ways to Grow Your Network as a Commercial Loan Broker

10:16 31 August in Blog, Broker Resources

Different from your social network, your business network as a commercial loan broker is all about making and building connections to help you succeed within your industry. It is no secret that building your network is key to building a successful loan brokerage. And, not only is networking imperative in growing your client base, but it also plays a huge part in developing your reputation as someone who can get transactions funded.

There are plenty of reasons you should be networking as a commercial loan broker. So, when you are working to make connections in the commercial lending industry, follow the four tips below.

  1. Partner with the right lender.

One of the most important networking tips for commercial loan brokers is to partner with a group of lenders that will help you maximize your efforts and meet your goals. By working with the best lenders, you not only will be able to offer your clients great choices for funding, but ideal lenders will provide what your clients need so you can focus on growing your business while also making your clients happy.

When looking for a lender to work with, keep an eye out for a lender that offers a referral program, such as Capstone Capital Group’s Referral and Broker Program. Not only does Capstone Capital Group’s referral program pay you commission for each client you bring in for the life of the contract, but they also provide other benefits such as broker support and training, and full accounting.

Satisfying your client’s needs not only leads to your success as a commercial loan broker, but it will also help you continue building your network. Since you need to have the ability to offer your clients options for loans to fit their individual needs as a broker, also partner with lenders that provide back and front office services to their clients, like Capstone.

After all, your goal in networking is to gain more clients. So, you need to partner with the best lenders to be able to offer your clients the best options to keep them happy.

  1. Keep your priorities straight.

Once you’ve found suitable lenders and investors to partner with, like Capstone Capital Group, you’ll get to work pairing them with the right businesses in need. During this time, it’s imperative that you keep in mind the promises you have made to your clients and the lenders in your network, and follow through with those promises.

As a commercial loan broker, your top priority should always be to match clients and lenders with opportunities that will help each party succeed. By keeping your priorities straight, you will ensure that you are building trusting relationships with lenders and clients. And, as word of mouth advertising is incredibly powerful and happy clients tell others about their successes, in order to grow your network, you need to follow through with every client and each promise you make.

  1. Take advantage of social media.

In order to make new business connections and grow your network as a commercial loan broker, you can go through traditional means, such as cold calling or sending out emails. However, it is also equally as important to utilize social media sites as well.

Take advantage of today’s social media by setting up different accounts on different sites including Facebook, Twitter, LinkedIn, and Google+. These popular sites make it easy to share information while interacting with a range of associates and borrowers. To expand your network, set up both a personal page and a company page. Then, join forums, participate in discussions, and share interesting industry news on your pages to continue growing your network.

  1. Participate in industry events.

Attending industry events or networking events is another way to make connections within your industry as a commercial loan broker. All it takes is a quick search online to check on upcoming events for the commercial lending industry and in your area. Industry events could include lunches, trade shows, and seminars, all of which present an excellent opportunity to network and expand your business circle.

As with most things in life, practice and preparation are necessary for successful networking in any industry. If you find you are not constantly networking, you could be missing out on big opportunities for your business. So, start your networking process by setting goals, creating social media accounts, finding industry events to attend, and signing up for Capstone’s Referral and Broker Program.

Brokers & Lenders

Understanding the difference between brokers and lenders

10:30 07 November in Broker Resources, Business Funding

Oftentimes, when a business owner is seeking financing, they do not understand the difference between dealing with brokers and lenders. There are advantages, and disadvantages to working with each; however, one must understand how each functions to understand what type of deal they will be getting in the end.

Dealing with financial brokers

When you are dealing with a broker for a financing deal, there are some benefits. The broker can review your proposal, and then try to match your needs up with the right lender. This often means the broker will contact numerous lenders on your behalf; while this may seem like a good approach, it could be problematic if the broker is not familiar with the various loan programs offered. Sometimes working with a broker means significant delays in getting the financing you need.

Dealing with lenders

When you deal with a direct lender, you are dealing with the decision-maker. This is good news on one hand but may cause you additional problems. If you deal directly with a lender, you are limited to the programs offered by that lender. In other words, if you go to a company who only factors invoices, you may not be able to obtain a line of credit, or other financing vehicles. This can be problematic if you need various sources of capital.

Understanding financial broker fees

When you are searching for financing through a broker, it is important to understand how they are paid for their services. In some instances, the broker will receive a one-time finder’s fee; in other cases, an ongoing commission. There may also be instances where you pay a higher interest rate because you went through a financial broker instead of going directly to the lender. Make sure before you agree to have a broker work on your behalf, you understand how they are paid, and what their fee will cost you immediately, and over time.

Benefits of working with brokers

Even if you are paying a finder’s fee, or a commission, there are some valid reasons to consider working with a broker who handles business financing. By working with a broker, you will have access to numerous loan programs; a well-trained broker will review your needs, discuss your options with you and then match your unique needs to the right lender. They can also facilitate the paperwork, help with the application process, and answer questions as they arise.

Relationships matter with financing

For those business owners who have an existing relationship with a financial broker, you should maintain that relationship. While many lenders discourage such relationships, at Capstone Capital Group, we encourage them. We know that when your broker comes to us for financing options for your business, they are looking out for your interests. We take pride in offering those brokers who are interested in doing business with Capstone a wide range of training materials so they understand our products better. We believe in building relationships; and nurturing existing relationships.

Finding the right brokers and lenders

The most important thing you can do for yourself, and to ensure your business continues to grow is find the right brokers and lenders to work with. Well-established businesses, with excellent cash-flow and a record of success often can go to their commercial bank and get whatever products they need. However, small, and medium-sized businesses face unique challenges: they need different types of financing, they may not have reliable cash flow.

Business owners need solutions that work for them; this means working with a financial partner who is willing to take the time to review their business model, review their current finances, and understand their future goals. If you are currently working with a broker, or a lender who does not seem to ask the right questions, or continues to try to fit you into a “one-size-fits-all” loan, you may be working with the wrong person.

If you are small or mid-sized business owner seeking a relationship to help your business secure the financing you need, contact Capstone Capital Group today. We are a private financing company who works tirelessly to find funding solutions for our clients. Brokers, who are interested in working with a lender who puts the interest of their clients first should also contact us. We offer innovative solutions to a wide range of financing challenges for small and midsized businesses; call us today and see how we can help.

Download: Infrastructure Investment & Jobs Act – Contract Opportunities and Funding Analysis

Capstone wants your business to take full advantage of the opportunities (or use projects) available through the Infrastructure Investment & Jobs Act recently signed into law.

Download

    Logo

    Submit your information to be directed to the download page.

    Privacy & Terms