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Why You Should Consider Starting a Netbranch Business

September 14th, 2021 // branchright

Netbranch is making waves with more and more businesses who are moving into the lending industry now more than ever, and for a good reason. Many of these businesses are venturing into the independent broker business, some utilizing the Netbranch structure. This allows them to benefit from the already existing corporate structures while still maintaining a great deal of autonomy. 

If you’re reading this, you’re probably interested in breaking into this rather lucrative lending industry and securing the financial future of your business. In this post, we’ll share reasons why you should consider Netbranch

What is Netbranch?

Netbranching is a lending business where the broker is the employee of a much larger lender, though they are still regarded as an independent lender. It’s comparable to an affiliate distributor or a franchise business, however, unlike a franchise, the broker gets little to no guidance or supervision from the primary lender. They are also not responsible for reporting the yield spread premiums to the primary lender. 

Such Netbranch agreements are increasingly becoming common all across the country. As a result, there will be significant variations from one arrangement to another. Some lenders do push to be more hands-on with their affiliate partners, while others will want no involvement at all. There will also be differences based on the commission percentages and the lending rates. 

One of the key differences that sets one Netbranch from another is the loans and the lenders the branch can access. The loans essentially create the backbone of the program. When you find a lender that’s reputable and has acceptable loan programs, it will be much easier for you to operate a successful Netbranch. 

Here are some Advantages of Working with a Netbranch

Opportunity to Earn More

Of course, this is one of the main reasons why many people are attracted to Netbranch. Working for a traditional broker or a lender generally means that you will be locked into a specific compensation plan. Making matters worse, compensation will often only increase when the loan premiums rise, translating into a much harder time when it comes to closing deals. 

However, low compensation or high premiums are not the only available options. When working as a netbranch broker, you will get significantly more control compared to the traditional employment arrangement. In many cases, the commissions will be much higher and you will have greater control over the premium rates. The majority of netbranch managers usually earn a commission of 100% on their deals. This is in great contrast to the 2% to 5% they would earn otherwise. 

Lower Operating Costs

Of course, it won’t be free to manage a netbranch business, though the operating costs are generally very manageable. The affiliate structure will help to distribute the operating costs among the primary lender and the netbranch operations. Ultimately, this will benefit everyone involved. The lender will lower their expenses and can therefore provide better rates. 

The branch manager will still pay fewer fees compared to if they operated as a lender. Finally, the clients will get to enjoy considerably lower fees and expenses. 

Better Rates

As mentioned, the netbranch arrangement will benefit the broker managers, lender companies, and the customers alike. Although you might be most interested in how this should be advantageous to you as the broker, it’s still important to understand why customers and lenders prefer this infrastructure as well. And as you can probably imagine, it will come down to the money. 

Many parent lenders usually cut down their workload, which is often never-ending, by passing along some of their tasks to the broker manager. A good brokerage should confidently handle its own accounting, payroll, and other daily tasks associated with the business. The parent lender will in turn put more effort into tasks that facilitate origination of loans. This way, the customer will be able to enjoy much lower rates than in most other alternatives. This is how netbranch businesses keep customers happy and the referrals coming. 

A Great Size

There are few opportunities in which a business can honestly move towards success on their own. Generally speaking, small businesses do require a number of unique third-party companies and/or employees offering specific services. A netbranch organization lets you operate with a number of employees your business can comfortably handle. 

This makes netbranch opportunities enticing to brokers at different levels in their careers. For instance, a small team that works well together may decide to branch out on their own, leaving the confines of their existing business. The resources that the parent company puts forth will make the transition and growth process much easier. 

Final Thoughts

If you’re tired of working for a lender that doesn’t appreciate your work or understand the value you bring, netbranch is a worthy consideration. This is keeping in mind that many lenders offer laughable mortgage rates along with small commissions. Place the future of your business in your own hands by becoming an affiliate broker manager. The netbranch infrastructure setup comes with great advantages, and makes for a smart career move.