Are Commercial Lending Platforms Worth the Cost for Brokers?

Historically, brokers relied on referrals, industry networking, and personal relationships to find lenders. Technology has changed the landscape, with commercial lending platforms offering a new way for brokers to source loan products for their clients. The introduction of AI has further evolved these platforms, promising an accelerated process and increased deal flow

This all might be true, but it comes at a cost. Let’s take a closer look at the pros and cons of commercial lending platforms.    

Quick Summary

• Times have changed. Commercial lending platforms are evolving the way brokers do business.
• Understand the impact. Although there are upsides to these platforms, they come at a cost.
• Mix it up. The most successful brokers will take a hybrid approach.

How Do Commercial Lending Platforms Work?

Solutions like Janover and CommLoan have networks made up of lenders that have chosen to participate. When a broker or borrower submits deal details, they are matched with potential lenders. Some platforms also provide tools for submitting the requested paperwork, generating documents, and automating some workflows.

What Are the Potential Benefits of Commercial Lending Platforms?

Brokers need to maintain diverse networks to serve their clients and act fast. Commercial lending platforms can support both of these goals.

Identify More Opportunities for Borrowers

The networks may contain lenders you are not already familiar with, providing more options for your clients. Using these types of platforms is a great way to get exposure to new lenders on the scene or expand into new regions. 

Save Time

Lender matching happens in minutes, and automated workflows reduce the time spent on each deal. Quickly get a list of potential lenders and supplement it with your own knowledge to round it out.  

Automated Documentation

Unless you love paperwork, this is one of the top benefits of commercial lending platforms. In many cases, you can enter the information once, and the commercial broker software does most of the work for you. 

What Are the Potential Drawbacks of Commercial Lending Platforms?

When investing time and resources in any new solution, it’s important to understand the possible drawbacks, both in actual dollars and costs that are harder to quantify. So, what do commercial lending platforms cost?

Hard Costs

These platforms aren’t free. Some platforms charge only licensing fees to use the software, whereas others charge both a monthly fee and a portion of commissions. For example, one solution costs $150 to sign up, and an ongoing $150 per month, in addition to commissions. Another, which doesn’t split commissions, starts at $399 per month. This investment might be worth it to expand your network, but take a moment to assess the ROI. 

Intangible Costs

Not every potential downside can be easily quantified, but it’s important to be aware of hidden costs. 

• Wasted time: A common issue with these types of platforms is getting quick “approvals” that are not actually real. Pursuing these dead ends takes valuable time that would be better spent working with a lender that can actually help you.
• Lack of personalization: Commercial lending platforms might make it easier for brokers to source and organize loan options, but you should never replace the type of relationship-building that is necessary for pairing borrowers with the right lender.
• Lack of regional knowledge: One of the advantages of working with local lenders is that they understand the markets where they live and work. You won’t get all of these nuances on a platform that collates lenders. 
• Risk of “techlash”: “Techlash” refers to “a strong and widespread negative reaction to the growing power and influence of large technology companies.” Although some consumers embrace advanced technologies, others are wary of, or even vehemently against, solutions that leverage AI, especially when it comes to their personal and financial details.
• Missing lenders: Not every lender participates in these platforms, so you’re not getting the full picture. For example, your search may be missing on hard money lenders that could be a good fit for your clients. This is why building your own network is crucial, especially for local deals.

Explore All Your Lender Options

There are benefits to using these platforms, but they should not be the only solution you use to find lenders and loan products. Keep building relationships with lenders you trust to ensure you’re providing the best possible service to your clients.

Socotra Capital thrives on offering unique solutions for commercial real estate deals that you won’t necessarily find on a commercial lending platform. Because we’re a private lender, we can be more flexible and move more quickly than many other lenders. One of our strengths is building relationships with brokers and borrowers, allowing us to respond quickly when new deals arise. 

We hope that brokers will make the most of all the tools available, including the relationship building we have relied on for decades.

Getting started is easy. If you have a deal in mind, simply apply for a loan to start the conversation.