The primary lending models are balance sheet, marketplace and brokerage.  The balance sheet lenders have access to committed funds and underwrite to hold the loans for their own account. This group includes firms like OnDeck, CAN, QuickBridge, National and our firm, Channel Partners Capital. Marketplace lenders (also referred to as peer-to-peer) have developed elaborate loan placement technology backbones that allow them to fund and manage a portfolio of loans, for a fee, on behalf of multiple individual and institutional investors who actually buy the yield and the risk of the loan from the marketplace lender, who continues to service the loan on behalf of the investor. This group includes firms like Funding Circle, DealStruck and Lending Club. The third group provides enhanced loan packaging and credit provider search tools for individual borrowers for a fee. This group includes firms like Lendio, Fundera and BoeFly.

The rapidly expanding market for working capital is expected to experience loan originations growth rates in the high double digits over the next several years. The working capital market, at well over $5 billion in annual originations, has become too big to ignore and represents an attractive fee income opportunity for any firm that deals with small business. As previously noted, when your customers are growing and have increased access to working capital more lease opportunities will come your way.

Can you and your business capitalize on the emerging market for small business working capital loan products?  As a leasing professional you know that the economics of the small business leasing model depend on meeting the equipment needs of the same broad and diverse small business customer set. Most of the fintech working capital lenders and the entities they are affiliated with are going after the same prospects through active direct marketing campaigns. Historically, many leasing professionals have been appropriately cautious about working capital products. Many of you have been even more cautious about connecting your customers to a fintech lender that has product strategies that may include disintermediating you from your customers, not just in the working capital product category, but potentially from your core leasing solutions.

The equipment finance industry is responsible for over $900 billion in financial assets within the U.S., 33% of the industry is made up of micro (less than $25,000) and small ticket ($25,000 - $250,000) finance. This part of the industry has unique access to small business borrowers.  Approximately $60 billion of that market is controlled by independents within the leasing value chain and these lease brokers and lessors control the bulk of the all-important “point of sale” interaction with these small businesses. There is a substantial and growing unfilled demand for the easier access working capital loan products that address your borrower’s needs and can help your leasing business grow. These customers are being solicited directly by other providers while you are currently in the best position to advise and direct them to an important financial solution.

It is your choice to ask: “Do you have working capital needs?”