Let’s talk about business funding. If you’re running an MCA business, you’ve probably heard terms like “business funding leads” and “direct lending.” Now, they might sound similar, but they’re not. Understanding the difference can save you a lot of time and prevent headaches in getting the appropriate type of funding for your company.
So, let’s cut through the jargon and know what these things mean, how they operate, and why it’s important to your lending company’s bottom line.
What Are Business Funding Leads?
These leads are businesses in search of funding. They are created by agencies that match businesses seeking funds with possible lenders. These agencies serve as middlemen, collecting data on businesses seeking funding and then transferring that data to lenders who can assist.
For example, if you’re an MCA company, you could partner with a firm that offers business funding leads. They’ll provide you with a list of businesses looking for funding, and you’re responsible for calling them and closing the sale. It’s discovering potential customers without investing time and money in cold calling.
What Is Direct Lending?
Direct lending is a different term. Here, the lender advances the money directly to the business. No middleman. If you’re a direct lender, you’re the one who’s considering the business, approving the loan, and servicing the relationship with the borrower. That means you get to control the process from start to finish, but you also have to go out and find your own clients.
Direct lending might be a good choice if you have the funds to do it all internally. But it does take more work because you’ll need to promote your services, drive leads, and fund the whole thing yourself.
Differences Between Business Funding Leads and Direct Lending
Now that we’ve covered the basics of business funding leads and direct lending let’s dig into how they differ. Here are key distinctions that set them apart, and understanding these can help you choose the right option for your business.
Role in the Process: Business financing leads providers to connect businesses with borrowers. They are not the fund providers. Direct lenders, on the other hand, are directly offering the finances.
Resources and Work: With business funding leads, the hard work—identifying companies seeking financing—largely becomes unnecessary. Through direct lending, however, it’s all your responsibility, from generating the lead to clinching the sale.
Cost: Business funding leads often come at a price. You’re paying for the convenience of having leads handed to you. Direct lending might not have this upfront cost, but it requires more investment in marketing and operations.
Which One Is Right for You?
It varies based on your business model. If you’re an MCA lender focusing on closing deals and saving time, business funding leads are the way to go. If you want complete control and are willing to put in the extra effort, then direct lending could be a better fit.
There are advantages and disadvantages to both. The thing is knowing your needs and picking what best suits you. Either way, the objective is the same: assisting small businesses in securing the finance they need to expand. It’s about what works best for your business. Need funding fast? Go with leads. Want to own the process? Direct lending is your move. Ready to take the next step? Contact us to determine what fits your style, and get started today. Your business will thank you!