Franchisors: Replace Your Loan Broker With LoanBox

Franchisors: Replace your loan broker with LoanBox

For growing franchisors, it can become a task to find the right lenders, and enough of them to assist all of their different franchisees’ different financing needs in different states. Most franchisors aren’t able or even want to have full time staff dedicated to assisting their franchisees with financing. But most franchisors do want to help and often refer their franchisees to third party loan brokers, ROBS providers, or a bank or two they know who have financed other franchisees.

While franchisors are selling new franchisees in part on the franchisor’s successful system, most franchisors don’t also extend a system for assisting franchises with financing. If you’re a franchisor and this sounds generally like you, then consider the LoanBox Franchise Lending System.

LoanBox provides franchisors with a customized lending system enabling them to have their loan packaging, lender matchmaking, and loan process management, all in house, and as an integrated part of the franchisor’s system. This groundbreaking platform reshapes the lending experience by connecting franchisees with a specific set of preferred lenders who are familiar with your brand and have already vetted the types of loans they want to target.

LoanBox enables your franchise borrowers to instantly submit their loan package to all your preferred lenders simultaneously, encouraging a truly competitive lending environment. LoanBox simplifies the loan process, reducing stress while offering more choices, digital and human support, faster turnaround times, and better outcomes.

Brokers typically don’t shop your loan
It's a common misconception within the franchise lending industry that loan brokers are actively brokering, diligently sending loans from a franchise brand to an array of diverse lenders, and trying to get the best deal and situation for the borrower. This is just not the case for most loan brokers as the inefficiencies of doing so are too high for what is typically a low fee (1% of the loan amount).

Brokers typically use one primary lender
Many loan brokers are acting more as external salespeople for one bank (or two) rather than serving as true brokers for the franchisee. This practice often leads to brokers sending all their loans to the same lender(s), and if their primary lenders can't facilitate the loan, they rarely bother to explore other possibilities. While insiders know this it is also revealed with analytics in SBA lending.

Brokers typically add to the borrower’s costs
It's also a misperception that loan brokers get their borrowers better rates than if the franchisee went to the lender direct. Our analytics show in most cases the franchisees using a loan broker will not pay a lower interest rate than those who go to a bank direct. While a borrower may not pay a fee to the broker the bank will be and typically will charge a higher rate to the borrower to compensate for the referral fee they pay the broker. This is also revealed through analytics for SBA lending.

Brokers often charge $2500 or more to send you forms and a checklist
Banks need a set of documents and information (loan package) in order to determine if they think they can get the loan approved and funded. Many brokers will charge an upfront fee for this regardless of if they are unsuccessful in getting the loan funded. Some are more helpful in this process than others and it’s hard for a franchisor to know if their franchise borrowers are getting value from this or not.

Some loan brokers are primarily ROBS Plan salespeople
Many brokers channel a significant portion of franchise loans toward ROBS (Rollovers for Business Startups) plans, which allow individuals to use retirement funds to start a business. While this option may suit a small subset of borrowers, some brokers promote it as the primary solution, while LoanBox views it as a secondary solution or last resort.

Technology like LoanBox has made mediocore loan brokers obsolete
The traditional loan broker model is undergoing a transformation. With advancements in technology and increased competition, brokers who fail to provide exceptional value beyond lender introductions will struggle to survive. Brokers acting merely as single-lender sales representatives must adapt or risk becoming obsolete.

Franchise Loan Broker Audit

For franchisors hesitant about moving away from traditional brokers, LoanBox offers a complimentary Loan Broker Analytic Audit. This audit provides a detailed analysis of the SBA lenders your broker has used, the average rates your brand has received, and how those rates compare to other similar franchises working with the same lender(s). These audits typically reveal >80% of the broker’s closed loan dollars were with one lender and the brokered loans have higher interest rates than your franchise borrowers’ non-brokered loans.

Loan brokers who act as consultative experts, offer additional support, and guide borrowers through every step of the process will always play a vital role in business lending. These professionals provide clarity and direction, helping business borrowers navigate the often complex lending landscape. But many brokers have one lender and one map. In comparison LoanBox is a GPS for borrowers, steering them toward the right solutions for startup or established franchise financing. LoanBox offers a smarter, more streamlined approach for today’s business lending. Forward thinking franchisors are upgrading their franchisees from a loan broker referral to a LoanBox login.

This article is authored by Darin Manis, founder of LoanBox.

Source: All SBA 7(a) data shared is based on all SBA lending from all sources and not from SBA lending through LoanBox. SBA data and reports are not from the SBA but from SBA data from the lending analytics platform developed and maintained by SBADNA Analytics. SBADNA and LoanBox are both owned by the same parent company FuseSync LLC.  LoanBox and SBADNA does not validate or verify the data released by the SBA and provides no warranty of data accuracy or completeness.