Making it rain is one thing—knowing how to manage the rainwater is another. You should never need to turn otherwise qualified leads away.

The first challenge in any business, including private lending, is creating consistent lead flow. This challenge is learning how to “make it rain.”

The second, and much more daunting challenge, is to create a system that turns leads into deals. This challenge is learning how to “manage the rainwater.”

As lenders, we must constantly learn new ways to say “yes” instead of “no” to our leads by eliminating the restrictions of our current business models. That means constantly adjusting our business models to be increasingly efficient.

Making it Rain

We spend a lot of time discussing how to create lead flow. And rightfully so! It’s only logical to start from square one.

Here are some ways to include marketing tactics in your business model that will “make it rain.”

Market to your niche and/or specialty. When it comes to marketing, it is essential to have a message-to-market match. Your marketing efforts shouldn’t attract just any lead; they should create leads you know you can monetize.

For example, if your underwriting guidelines don’t require a minimum credit score and/or borrower experience, and you know most other lenders do, make sure your marketing conveys that message. As a marketer, your goal is to “stop the scroll.” When a client has a specific pain point (e.g., a low credit score or lack of experience), seeing an ad that focuses specifically on that issue will “stop their scroll” because it addresses their need.

Focus your marketing efforts on reputational capital. Though intangible, reputational assets refer to things like your clients’ successes, including examples of successes from their previous experience or even the success they attain working with you.

For example, you may choose to decrease the cost of capital for your clients when they leverage their success by offering lower rates and terms for repeat borrowers. You may also start clients with better rates and terms if they can show enough recent experience. This approach allows you to match or beat your competitors when you are working to earn more business.

Marketing in this way allows you to appeal to new investors as well as focus on building long-term relationships with your current clients, ensuring sustained lead flow from these borrowers.

Highlight the value adds you offer beyond the capital. This approach forces you to take a close look at your unique selling propositions (USPs). USPs are the unique benefits you offer clients that put you ahead of your competitors; in other words, what distinguishes you or sets you apart.

Remember: Clients are always tuned in to WIFM (What’s In It For Me). Never focus on the capital.

Although you may be a private money lender and your primary product is your capital, you must be able to market additional value. For example, you may consider offering consultation on off-market acquisition strategies. You can market to the common challenges clients often have before they qualify for asset-based financing. If you service your loans in-house, this is also a USP—you can give clients peace of mind they will work with the same company throughout the lending process rather than needing to begin a new relationship with a third-party loan servicer.

Communicate benefits you can offer your leads as they move through the approval process. These benefits engage your leads and encourage their continued participation with you.

For example, if you are an asset-based lender and you require the deal to be under contract before you can offer financing, what happens to the leads that don’t have a contract in hand? Perhaps you can offer them a proof-of-fund letter to continue moving them through your sales funnel no matter what stage they are in the buying process. Essentially, you are “gamifying” the loan process by having consistent, achievable objectives for your leads that keep them moving forward and engaged, even if they don’t yet meet all the criteria necessary to receive financing.

Gamifying allows you to build rapport, provide value, and establish your credibility in the industry.

Create a self-sustaining machine. Remember: It is never your client’s responsibility to remember you. It is your job as the marketer to make sure they never forget you.

To do that, you must develop a self-sustaining ecosystem with interwoven channels that prompt prospects to respond to a CTA, or call to action.

For example, at the end of all your marketing materials, include a clear demand for commitment. You cannot simply create an ad that talks about your business and leave it at that. Instead, you must direct the prospect to reach out to you. Without a direct invitation to connect with you, the prospect rarely will.

Be sure to focus your CTAs on the niches that set you apart from your competitors and require the prospect to take action for more information. Remember, your marketing must remind every prospect how you answer the WIFM question. Doing so will create quality leads to high probability prospects.

Focus on creating a broker channel. A broker channel allows you to accept loans from brokers looking to fund their clients’ deals. As a lender, if you allow brokers to bring you deals and charge a broker fee on your loans, you will be getting a lot more deal flow coming directly from brokers—deal flow that you did not need to market to or acquire on your own. A broker channel, therefore, allows you to extend your team outside your company walls.

Since brokers can ensure their borrowers meet your initial criteria prior to sending the lead to you, a broker channel allows you to qualify and close a bigger percentage of your leads and make them repeat borrowers. The advantages of a broker channel are numerous, and the disadvantages are few. One possible challenge would be winning over the brokers so you are their first and preferred stop when shopping a borrower. One method to encourage this is to market to brokers by offering to teach them the business. You can offer them ongoing training and mentorship as a bonus. By teaching and certifying your brokers, you ensure they will bring their deals to you first.

Brokers are free assets to your company—if you put in the time and effort.

Managing the Rainwater

If you follow the strategies for generating quality leads, you’ll have consistent lead flow. You’ve made it rain!

But how do you manage all that rainwater? What tactics should you implement to balance incoming deal flow, or leads, with the capital you have available to fund loans?

Think about this: As a lender (especially an asset-based lender), how often have you said no to a perfectly good deal—one in which the numbers made sense, the borrower seemed strong, and the risk seemed low? Why did you say no?

Quite simply, it’s usually because the deal didn’t fit your “underwriting box.” As a result, you threw away a great lead that you spent time and resources capturing.

As private lenders, we do this consistently! Every. Single. Day. We need to figure out what we can adjust in our business model to account for leads that fall outside our loan criteria.

The solution is simple. Your business model shouldn’t just account for how you can make a deal work; it should also reflect who you need to know to make a deal work.

Let’s look at how creating different partnerships can allow you to create a better alignment between your lead flow and your deal flow.

Include correspondent lender connections. Creating correspondent relationships is a popular strategy private lenders use to say yes to deals normally outside their wheelhouse. In correspondent lending, you still do most of the work, collecting all the paperwork and communicating with the client throughout the process—essentially white labeling another lenders’ product, with that lender still funding the loan.

The beauty of correspondent relationships is they allow you to extend your loan program menu. By partnering with lenders who target different niches or even geographic areas you do not cover, you can say yes to leads you might otherwise have rejected. You can turn them into deals without major changes to your loan underwriting criteria or risk model.

For example, just last year, about 15% of our total deployed loan volume was through deals we had said no to in the past. We got them funded through correspondent lenders. Embracing this strategy has transformed a lot of leads from unmonetized prospects into repeat clients.

Include referral or JV connections. Another way to say yes while still monetizing leads (and requires less work than correspondent lending): referral partnerships. These relationships allow you to hand the lead off to someone else to do all the work, and you still get paid.

A referral relationship is vastly different from a correspondent relationship. In a referral, your work ends after you hand your partner the contact information. You are free to keep the client in your book of business for future services, but in the current deal, you hand off all responsibility to your referral partner.

These relationships are also called joint-venture connections because cross-marketing commonly is involved.

Referral relationships shouldn’t be earth-shattering news for most of us. We know they should be part of our plan; however, we rarely put a formal process in place. We will say no to a lead and do the work of referring that deal to another lender without getting paid for it, or we just say no to a well-qualified lead and lose a potential repeat, experienced borrower. If a borrower knows you will always work to find a home for your deal, even if it isn’t with you, you will always be their first stop when they need funding.