What’s Challenging in the Broker World

Are you a small business finance broker? Here are some of the most common challenges that they report to deBanked.

The lender I was working with was not a lender
This is a preventable mistake. Instead of falling for a cold call, check the appropriate state registries, ask for feedback from your peers online (or in person), and conduct extensive due diligence. If you’re not willing to conduct due diligence as a broker, you will inevitably be fooled.

The deal was intercepted by a third party
Whether it’s through backdooring, big data, or a customer lying about shopping around, brokers often report the sudden appearance of a mysterious competitor right as their deal was approaching the finish line. Since there seems to be virtually no remedy on the horizon for this, brokers should speak candidly with their clients upfront about what to expect and lock in their loyalty well in advance so that this mysterious competition is shut down.

The available lead quality in the public marketplace is low or good exclusive leads are non-existent
If the business was easy as buying the same leads as everyone else and using them to earn huge profits on the deals closed without much hassle, then every single person in the country would be a broker. Being a broker is hard work and a significant part of the gig is marketing. You’ll have to decide if you or someone you hire is up to the task of generating the deals for you or your closers to close. If you can’t figure out how to market, you will eventually fail.

I didn’t get paid on a funded deal
While relationships do count for a lot, broker agreements count for just as much. As much as smaller shops roll their eyes at the prospect of having to shell out funds for attorneys to review contracts, it is a necessary cost to operate. If a lending company believes it doesn’t have to pay you, it won’t. Don’t be surprised when it happens to you. Instead be ready with your agreement, the facts, and your attorney to remedy the issue. Brokers unable to afford legal representation are much more likely to be bullied by a lender than everyone else. So do all the boring but necessary due diligence before signing up and if they ultimately breach the agreement with you, be ready to stand up for yourself in a way they will have no choice but to respect.