Broker or Direct Lender?

The question I get most often when speaking to business owners is: "Are you a broker or direct lender?" The honest answer is both, but the question itself reveals that most business owners aren't familiar enough with the Alternative Lending Industry to ask the right question which is: "What do you offer?" or, even better: "I have this specific need for capital now, what terms can you offer my business?"

Direct lenders - there isn't just one flavor. Most direct lenders specialize in one or more areas but don't offer products in others. For example, there are A-paper lenders who only make offers to premium credit profiles and decline all others. Many other direct lenders will focus on compromised credit profiles with low fico scores or poor payment history but they won't offer premium, Tier-1 lending products.

Brokers - Clearly here there is more variety lol! For business owners seeking capital, a good broker (i.e. one who is honest, returns calls and works with the merchant to secure optimal funding) is more valuable than any one direct lender. When a business owner approaches direct lenders themselves they're options are limited. They may receive a good offer but a broker, because they are immersed in the market daily, will know exactly which direct lender(s) are most compatible with the profile and, because they do volume with the lender they can influence towards better terms.

Finally, common sense is a business owners most valuable tool. Whenever you are offered a great deal but it's conditional on first taking a really bad deal, red flags should be shooting out of your ears! There are good and bad players in every industry and Alternative Lending is no different. The signs are the same across the board though. Professionals stand out because they are straight, efficient, courteous and behave like professionals - thankfully they are easy to spot!

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