Other Common Brokered Products

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Lesson 1.02: Other Common Brokered Products

Very few factoring brokers limit themselves to factoring services only once their business is established and most offer a full array of small business finance services to their prospective clients.  Find out more by selecting the video at left and then view the supporting introductory lesson below.

Other Finance Products That Earn Commissions for Factoring Brokers

In conversations regarding the opportunities found in the factoring and alternative commercial finance industry, the term “factoring broker” is actually a bit misleading.  Although there are some in the industry, notably sponsored agents, who do focus their marketing efforts strictly on factoring, the vast majority of both full and part-time career oriented brokers and consultants represent financial products and tools other than strictly the factoring product.  These include…

Asset-Based Lending

Asset-based loans are true loans typically structured as “revolving lines of credit”. Unlike factoring which strictly is used to finance terms of payment on invoices, asset-based loans are used to finance invoices, inventory, equipment, and occasionally real estate.  Many factors also offer asset-based loans as a separate product line.

Next to factoring, asset-based loans will likely be your most popular commissionable product but will be a product available only to slightly larger companies.  Additionally and unlike factoring, businesses that are candidates for asset baes loans will be required to have some amount of credit history.  Unlike factoring, asset-based loans are not available to startups.  Also unlike factoring, commissions paid to referring brokers are not residual and paid for the life of the account.  When a referred asset based loan is accepted and funded by a bank or lender, the referring broker will be paid in “points” similar to a real estate loan. 

Purchase Order Finance

A powerful form of finance primarily used by manufacturers and distributors, purchase order finance provides funding when a manufacturer receives a large order for goods but the goods have yet to be manufactured.  Purchase order funding is used to fund the manufacturing process at the factory so the goods can be delivered against the firm order from a creditworthy customer.

Purchase order finance often provides a broker the opportunity to earn a “double commission” since most financings based on purchase order finance ultimately require factoring once the goods are manufactured and delivered.  Like factoring, purchase order finance rewards the broker with residual, life-of-account commission payments. 

Merchant Cash Advance

Merchant Cash Advance, and related ACH Cash Advance, are advances of cash made to a small business where the repayment will automatically be made daily and withdrawn from the borrower’s business checking account or credit card remittance account.  Interest rates for such advances are high and these financings are typically of the “last resort” type.

For Freelance Commercial Finance Consultants

In addition to factoring and the standard four financial products above, professional Freelance Commercial Finance Consultants typically operating on a full time career basis may offer such products as…

SBA Loans

Another popular product line for industry brokers, SBA loans are actually traditional bank loans that feature a loan guarantee by the U.S. Small Business Administration.  They have become a very popular product with knowledgeable independent brokers and are competitive with other providers in the asset-based lending arena.  Many are structured as asset-based loans with a revolving line of credit feature.  

Export Trade Finance

This is a very prominent product area for professional that market heavily in the manufacturing sector and make it a habit of attending trade shows, etc.  Freelance Consultants will focus heavily on international factoring but will also offer  EXIM Bank (Export Import Bank of the U.S.) programs and even a unique, factoring-related method of finance for very large cross-border orders called forfaiting.

Cash Flow Consumer Finance

Though many cash flow brokers have made the transition into factoring with its greater appeal and much easier methods of marketing, they still will offer the standard consumer financing products found in the “cash flow industry” of private mortgage note cash outs, structured settlement cash outs, inheritance advances, and pre-legal settlement advances. 

Affiliate Finance Programs – Addons

Another area of immense opportunity for all independent factoring brokers and freelance commercial finance consultants is affiliate marketing and in particular, those affiliate programs that are financial in their nature such as…

  • mortgage finance and reverse mortgage finance
  • credit cards
  • credit repair
  • collection services
  • auto loans
  • insurance products

Commissions paid from affiliate programs can  be supplemental to the larger commissions you will earn from factoring and other “core” business finance products and will provide some very good income generating opportunities and especially for those that are utilizing blogging to generate leads.

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