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The 4 Major Advantages Of A Netbranch Business

May 11th, 2021 // branchright
advantages of a Netbranch

More and more aspiring entrepreneurs are moving into the lending industry and for good reason. Many of these entrepreneurs are beginning to work as independent brokers utilizing a de jure Netbranch structure. This allows them to take advantage of existing corporate structures while still maintaining a great deal of autonomy. If you’re interested in breaking into the lending industry and securing your financial future, then you should seriously consider the strong advantages of a Netbranch.

 But first …

What Is A Netbranch?

A netbranch is a lending business where the broker is actually the employee of a larger lender, yet they are still considered an independent lender. It can be compared to a franchise business or an affiliate distributor. However, unlike a franchise business, the broker receives very little supervision or guidance from the primary lender. They are also not responsible for reporting yield spread premiums to the primary lender.

Netbranch agreements are becoming increasingly common across the country. As such, there are going to be some significant variations from one arrangement to another. Some lenders push to be more “hands-on” with their affiliate partners. Others may want little or no involvement at all. There may also be differences related to commission percentages and lending rates.

The biggest difference that sets one netbranch apart from the next is the lenders and loans that the branch has access to. These loans create the backbone for the entire program. Once you find a reputable lender with acceptable loan programs it becomes much easier to operate a successful netbranch.

Now let’s look at some of the most significant advantages of a netbranch.

1. A Chance To Earn More

This is, of course, the primary reason that so many people are attracted to the opportunity. Worker as a traditional broker for a lender generally means you will be locked into a very specific compensation plan. To make matters worse, compensation often only increases when loan premiums increase, which means you have a harder time closing deals and thus don’t necessarily earn any more.

But high premiums or low compensation are not the only two options. Working as a netbranch broker provides you with significantly more control than traditional employment. In most cases, commissions are much higher and you have plenty of control over premium rates. Many netbranch managers earn a 100% commission on their deals. Compare that to the 2 – 5% they might earn otherwise.

2. Low Operating Costs

Managing a netbranch business isn’t free, but the overall operating costs are very manageable. The affiliate structure helps distribute operating costs among the primary lender and the netbranch operations. Ultimately, this benefits everyone involved. The lender lowers expenses and thus can provide better loan rates. The branch manager still pays fewer fees than if they were operating as a lender. And finally, the clients get to enjoy somewhere reduced fees and expenses.

3. The Size You Need

There are few business opportunities where an entrepreneur can honestly move towards success on their own. In general, small businesses require several unique employees or third-party companies offering specific services. With a netbranch organization, you can operate with the number of employees that you find comfortable; whether that’s you alone or your entire team from your last job.

This makes netbranch opportunities very enticing to brokers at various points in their careers. For example, a broker who has recently left their job because of unfavorable circumstances or compensation. Likewise, a small team that works well together may decide to branch out on their own and leave the confines of their existing business. In either scenario, the resources put forth by the parent company make establishment and growth much easier.

4. Better Rates And Happy Customers

As mentioned, the netbranch structure benefits lender companies, broker managers, and customers alike. While you may be most interested in how this will benefit you as the broker, it’s important to understand why lenders and customers prefer this infrastructure as well. And as you can imagine, it all comes down to dollars and cents.

The work of a large-scale lender is nearly never-ending. But of the many tasks, they must accomplish, originating favorable mortgage loans is considered the most important. That’s why they must put as much time, effort, and resources as possible into originating these loans. Unfortunately, that becomes increasingly difficult while managing other routine tasks like payroll, auditing, and dealing with clients throughout the day.

Parent lenders cut away a large portion of these tasks by passing them along to the broker manager. An adequate broker will confidently handle their own payroll, accounting, and other day-to-day tasks associated with the business. In turn, the parent lender puts more time into originating favorable loans. And finally, the customer enjoys loan rates lower than anywhere else in town. That’s how netbranch businesses can keep customers happy and referrals flowing.

A Smart Move For A Smart Broker

Are you tired of working for a lender who doesn’t understand your value or appreciates your work? A lender who offers a laughable commission alongside infuriating mortgage rates? If so, then it might be time to take your future into your own hands and become an affiliate broker manager. The advantages of a netbranch infrastructure are plentiful and make for a smart career move.