We had the pleasure of attending and exhibiting at the Secured Finance Network (SFNet) 2019 Convention last week in NYC. We sat in on a fascinating Panel discussion, “Diversify to Grow”, moderated by Tania Daniel from ENGS Commercial Capital. If you missed this insightful discussion, here are our key takeaways from what industry leaders on the panel shared: Robyn Barrett (FSW Funding), James Baugh (North Mill Capital), Steve McDonald (Global Merchant Fund), and Mark Tiggelovan (Advantage Business Capital).
- Leverage Technology to Compete — The only way to compete and add new financial products to your offering is to take advantage of emerging technology, according to several of the panelists. Several panel members shared how they are using technology to their advantage. One panelist leveraged new technology to offer supply chain finance as a new product offering and mentioned that new technology can allow lenders to monitor their portfolio in more insightful ways thus enabling them to confidently diversify and grow. Other panelists encouraged lenders to look into leveraging fintech methods to benefit traditional lenders.
- Consider New Industries — Several panel members discussed the opportunities and challenges of financing the Cannabis industry as well as SaaS companies and other emerging industries. They shared that although lending to the Cannabis industry is still in its infancy, many are considering it and the future may bring significant opportunity. Several panelists shared experiences in lending to SaaS providers and offered recommendations. Keeping an open mind on new and emerging industries while minimizing risk was a key recommendation.
- Consolidate — Several panelists shared how their company was acquired or acquired a competitor in order to grow. In this very competitive lending landscape, panelists recommended consolidation as a way to grow and expand. Some of the positives shared were the ability to set pricing higher rather than compete on price, the opportunity to adopt new ways with which a competitor is doing business and leveraging technology a competitor has been using.
- Be First to Offer Cash Advance — Rather than let MCA companies be the first to offer quick cash to your customers, keep close relationships with your customers and let them know you offer cash advance and other quick turnaround financing if needed to avoid them going to other lenders. Panelists discussed ways to spot MCA loans and recommended what to do when an ABL or factoring company discovers their customer has an MCA loan, or worse has stacked several MCA loans. A key recommendation included requiring the customer to open up a new bank account to make deposits so an MCA would not be able to draw funds.
- Add Salespeople and Offer the Right Tools — Several panelists discussed the advantages of adding on more business development officers to grow and ways to give them the right tools to help them be successful. They recommended looking into new onboarding or supportive technology to follow a deal from start all the way through to funding.
- Use Effective Marketing Tactics — With certain financial products, such as transportation factoring, use online marketing methods to attract new customers. With more traditional asset-based lending and factoring, panelists recommended more traditional sales methods and giving BDO’s the right tools to onboard new customers, rather than rely on deals generated online as the majority of these deals were fraught with fraud or were simply not good candidates for financing as they were more likely to shop the deal to other online lenders.
Leveraging technology to help streamline onboarding, attract new clients, offer new financial products, and keep customers engaged from start to funding can be a significant competitive advantage for lenders
