The White Label Alternative…
Hubs, Master Brokers, Packagers and Umbrellas are all designed to create distribution routes in the loan business so where next for specialist bridging finance brokers? A White Label Partnership is the obvious progression, a structure whereby the introducer identifies opportunities which fit the lender’s criteria and thereafter maintains close involvement in the origination and participates in the economics of each transaction.
A White Label structure is suitable for residential and commercial bridging loans and development finance. First mortgage loans to owner-occupiers can be accommodated but would need a different process to ensure regulatory guide lines are not breached.
The White Label Partner enjoys agreed levels of authority from the lender while maintaining independence and control. Additionally, the Partner has brand recognition as a lender and ownership of the opportunity during the origination process. The economics of the transaction can be so structured that the introducer reduces or avoids charging a brokerage fee.
The lender benefits from the first offer of bridging loans within previously agreed criteria and a seamless relationship leading to increased volumes. Spending time establishing a White Label Partnership is a far better use of the lender’s resources than extending LTVs or offering other inducements which will not attract quality business in the way that this close co-operation will.
For the process to be effective, there must be transparency and total co-operation. The White Label Partner needs to truly understand the lender’s criteria and to have access to its valuation and legal panel. In this way, conversion rates will improve significantly and friction avoided.
The close working relationship resulting from White Label provides flexibility for the broker to vary interest rates and commission levels in a competitive environment. Where the lender cannot offer market-leading terms, the broker is free to place the business with another lender who does.
White Label is an attractive alternative for both introducer and lender but to justify establishing the structure the broker needs to be able to introduce volume business and appropriate management skills. Subject to this proviso, the White Label Partner will be able to initiate loans by issuing Heads of Terms and instructing valuations and possibly commencing the legal process in-house, avoiding delays and bottlenecks, remaining in the picture at all stages.
Additionally, involvement in the process enables the introducer to remain in close contact with the borrower’s further requirements for increased loans, renewals and extensions and new lending opportunities and refinance.
And is there a benefit for the borrower? There certainly should be as the flexible, close relationship between lender and introducer will enable competitive terms to be offered, processing periods to be shortened and progress to be monitored in real time.
White Label exists in other financing environments and, as it offers benefits to all parties, it will soon enter the bridging world. It will not be available to all but for those with suitable skills and access to volume business, there is a win-win opportunity waiting to be taken.