Storefront Lending Business: Opportunities and Challenges
As more and more consumers leave their banks for their financing needs, there’s plenty of opportunities that await to storefront lenders.
But it’s not always a walk in the park.
These lenders also face real challenges ahead.
Opportunities with Storefront Lenders
Despite the increasing number of online lenders, storefront lenders are still in the game. More people still prefer face-to-face transactions, especially when it comes to financing services. They have a generous underwriting strategy which is attractive to borrowers with lower income and credit ratings.
Storefront lenders offer flexible loan packages, which makes them a great alternative for traditional banks. They have several advantages over online lenders, to wit:
- Since they abide by their state’s payday lending regulations (especially when it comes to charging interests), consumers have more trust in storefront lenders.
- Since storefronts are easy to find, they provide more transparency for consumers.
- Storefronts are able to provide loans that best suit their clients’ needs.
Challenges with Storefront Lending
One of the major challenges faced by storefront lending businesses is finding customers. Needless to say, online lenders can easily market their services. Storefronts, on the other hand, rely largely on traditional advertising and walk-in customers.
Additionally, many people prefer online lenders over storefronts because of convenience. With the flexibility and convenience that online transactions bring, storefronts are constantly faced with issues on how to make their services easier and faster for their clients.
Thankfully, there are ways for storefronts to elevate their marketing and improve their processes. To obtain more clients, they will greatly benefit from marketing online. There are ad tech platforms that streamline the marketing process, allowing loan officers to program campaigns and run ads without too much human intervention.
Putting up a website also allows lenders to communicate with their customers with ease. They can set up online applications so that borrowers will just have to go to their office to finalize their loan requests and sign documents.
The storefront lending business remains to be a profitable industry despite the popularity of alternative lending companies. However, there are some challenges that storefront loan officers deal with, such as finding leads and improving their business processes.