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The Consultative Approach to Sales and Marketing of Alternative Lending Products

This article will attempt to guide up-and-coming business development personnel through the obstacles of marketing and selling what is considered by some prospects and conventional lenders to be “expensive” financing.

Having served as business develop-ment officer and managed teams of business development personnel for over 25 years in the commer-cial finance market, it would be an understatement to say I have encountered challenges in success-fully selling and marketing what is perceived to be “expensive” capital. Whether it’s factoring or purchase order financing (or for that matter, any non-bank credit product), there is generally excitement displayed by conventional lenders and prospects about the solutions alternative lenders offer and why we can facilitate successful transac-tions that conventional lenders may have difficulty financing. However, the exuberance can fade when the subject of price arises. Conventional lenders can be uncomfortable that hey have to discuss the “price” of alternative lending solutions with a prospect. They may feel it risks the future of their relationship with the prospect due to their misperception that discussing higher-priced capital has negative connotations. In order to provide a guide for successfully navigating the process of sales and marketing to both referral sources and prospects, let’s first take a look at the substance of the business development individual in today’s marketplace. Then, we can assess how to overcome the obstacles.

The New yet Old Norm of Business Development and Marketing in Commercial Finance - The source of new business development personnel has traditionally been from the ranks within the commercial finance industry (field examiners, account management, underwriting, etc.). Recent trends in the alternative finance market have been to hire business development personnel that come from outside the commercial finance industry, even from non-financial sectors. Many of these newcomers are highly skilled at using social media as a marketing tool. This type of new candidate may prove they bring a fresh perspective, especially for an alternative lender who can leverage specific industry knowledge (i.e. staffing, transportation, healthcare, purchase order financing, etc.) to assist in building a line of business. However, the business development candidate must demonstrate their ability to quickly grasp the nuances of alternative lending.

The more complex the financing being offered, the greater need for a special skill set beyond just opening doors and networking. Once a busi-ness development person is sitting with a referral source or prospective customer, they must listen and be adept at understanding the needs of the referral source and business owner. These needs may be financial or non-financial. Unfortunately, time is not typically the ally of the business development person, nor is patience! It’s important the sales manager or principal of the alternative lender develop a team that can perform a needs analysis and create a rapport quickly with referral sources and the prospect’s owner or decision maker. If the type of financing is complex, the busi-ness development person must be able to “walk the walk” and “talk the talk” in order to successfully win the deal. There is no shortcut, which is why a combination of the ability to structure credit solutions, combined with selling skills, is what ultimately is needed to help a business devel-opment person be successful. If you can redirect the business development person’s focus away from “term sheet” selling, then you can get them to effectively sell the value proposition of your solution. The amount of leads that convert to qualified prospects and new clients will directly increase if done properly.

“Selling” to Referral Sources - Most business development personnel use a two-pronged approach when marketing to referral sources. The first approach is developing a calling strategy on referral sources such as banks, consultants, brokers, investment bankers, CPAs, and attorneys. The execution of the strategy begins after an initial introduction, which should be a face-to-face meeting when possible. The direct meeting gives the busi-ness development person the ability to discuss the nuts and bolts of their solutions and how they can be a useful tool in the conventional lend-er’s arsenal when they are unable to meet the needs of a prospect or client. The more knowledge and situational experience the business development individual can display relative to prior success stories, and yes, even failures, the more comfort provided to the referral source. The referral source will be more likely to contact them with the confidence that they can discuss a multitude of different financing opportunities requiring a creative solution. This results in more swings in the busi-ness development person’s strike zone. The individual is also regarded as a trusted referral resource that takes a consultative approach when the needs don’t fit the profile of the referral source. Ultimately, the busi-ness development person’s network expands due to the fact that referral sources will have confidence when referring you to other members of their company, thus increasing valuable contact multipliers and opportunities.

The second approach consists of direct marketing through electronic platforms such as LinkedIn, as well as through database marketing. This approach allows you to reach referral sources and potential customers by perhaps targeting an industry that has a need for your solution. The challenge is managing the time needed for this effort and deter-mining how much contact is enough, or too much, and making sure you are reaching a decision maker in your direct calling efforts. We are all overwhelmed with the amount of emails we get and the tendency is to hit the delete button when we feel overloaded from a referral source. Also, how many LinkedIn pieces can one look at in a day?

When using these channels, it is imperative to become a ‘thought leader’ in your segment of the commercial finance market. Public speaking, group presentations, webinars, article writing, tomb-stones of deals completed and case studies illustrate your body of knowledge, leaving you regarded as a “trusted advisor”. Once your reach this status, you have the ability to mitigate the concern any referral source may have about price being the fundamental reason behind making a referral or not. The ultimate goal of a business devel-opment person should be to offer referral sources confidence in you and your alternative finance solution so they feel that it is a “risk” for them to not refer you and your solution!

"Selling" to the Prospect - You have now received an introduction by the referral to whom you have successfully marketed your solution and demonstrated the value and applicability of your product. The first discussion with the pros-pect should entail the business development person having a general understanding of the pros-pect’s operations and industry. The business development individual should always be a “listener” first. The ability to listen to the back-ground or history of the business, how the business or transactions work and the goals of the company and/or its principals are critical in performing a “needs analysis”. The needs analysis helps the business development person ascertain the amount, structure and timing of the financing requirements. It also provides a better understanding of the goal and/or purpose of the financing (e.g., make an acquisition, procure inventory to fulfill an order or contract with a defined delivery/cancel date, repay an existing lender seeking an exit, or the financing may be an alternative to raising equity). The more of this information a business development person can extract from the company’s prin-cipals, the more effective they can be in creating a rapport. This is the building block of demonstrating the value proposition of the business development person’s alternative lending solution. By adhering to the rapport, you will be able to show the prospect you offer a better alterna-tive (you shouldn’t be afraid to point out the alternatives to doing busi-ness with you and the advantages/disadvantages of other alternatives compared to your solution). Also, be prepared to have client and referral source testimonials available for the prospect as part of building the rapport. The end result of creating the rapport will allow the business development person to gain knowl-edge of the prospect’s business, goals of the principal and empower the business owner to want to close with you as quickly as possible. You now have the ability to overcome the pricing perception and make it a secondary reason in the decision-making process to move forward with you.


The rising business development person needs to make sure they have the skill set needed to sell alter-native lending solutions effectively. It is important the commercial finance company management team provides training and feedback on the technical aspects of the solu-tions to their business development team. By doing so, the business development person can confidently demonstrate they are “best in class” to both referral sources and pros-pects. Listening, probing, reflecting, and again, listening to referral sources and prospects will enable you to be empathetic to their needs and position yourself to navigate through obstacles like price and structure in any alternative financing proposal you put forth. The fruits of your labor will be rewarded with higher levels of success in number and quality of referrals, and ulti-mately, the closing of more new business.

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