SWOT Analysis of a Funding Company

Updated: Nov 10



You may think that you have all the knowledge that you need for your business to succeed, but a SWOT analysis will compel you to look at your business from a different perspective and in new ways.

When you take the time to do a SWOT analysis, you’ll be armed with a solid strategy for prioritizing the work that you need to do to grow your business. You’ll look at your strengths and weaknesses, and how you can leverage those to take advantage of the opportunities and threats that exist in your market..


Existing funders and ISOs can use a SWOT analysis to assess their current situation and determine a strategy to move forward. But, remember that things are constantly changing and you’ll want to reassess your strategy, starting with a new SWOT analysis every six to 12 months.


Below is a real world example of a SWOT analysis of a direct funding company in the alternative finance space. Final versions may not all look alike or include the same details like 'solutions'. I've made some minor edits to protect the company identity and IP.


Strengths

  • Low factor rates

  • Experienced underwriters

  • Been in business many years which gives credibility

  • Speed to offer from submission

  • Loan structured product for best merchants

  • Few clawbacks

  • Low default ratio


Weaknesses

  • Website- overall too simplistic, not updated, little SEO content, portal not working Solutions- Update and add useful functions for brokers like calculator, portal, articles/blogs with relevant content for brokers, not necessarily merchants

  • Technology setup for partners. Solutions- having a standard web API or open API that allows for quick transmission of data from potential partners. Also, anything else like an affiliate marketing program with link tracking or banner ads to promote on other websites.

  • Transparency on funded deals. Solutions- Further reporting internally of breakdown and details of deals like factor rates, months, industry type, etc...

  • Brand awareness within broker community. Solutions-create more awareness campaigns on social media, message boards, and groups/organizations with results measured.

  • Customer feedback measured and promoted; the saying for what your brand is goes something like 'you are what customers say you are'. Solutions- take surveys from brokers and merchants at various times whether it be after funding a deal, at renewal stage, randomly on social media, or when brokers login to portal. We need to know exactly what brokers think of the service they experience so we can act on that feedback.

  • Meetings including remote staff to build team. Solutions- monthly company meetings or weekly team meetings to review current status and future goals.

  • Job and skills training. Solutions- since we offer reimbursement for educational programs, we should recommend programs to take, like CFI for Certified Banking & Credit Analyst.

  • Strict underwriting guidelines. Solutions- This may be fine as is, being that we have low defaults or are wanting to be A paper funder, but it also limits us in funding higher volume.

  • Stipulations not consistent. Solutions- although some basic stips are always required, stips are inconsistent on almost every deal, and they can be excessive. There has to be a way to reduce that friction.



Opportunities

  • Using technology to gain referral partners in other verticals. Develop open API or other features that differentiate yourself

  • Build brand within ISO community. Need to be more creative with content, consistent, and higher volume in all channels.

  • This year especially MANY businesses need capital. All funders have same opportunity as businesses that need money, especially once PPP runs out.

  • Better delivery of Offer to ISO, can improve with technology. There are other funding companies that feature web based offers to allow for a more automated selection and revision of offers, which reduces friction and the time it takes for underwriting to do those same revisions.

  • Increased funding volume. With all of the things mentioned and beyond, we can increase volume with new strategy and implementation.

  • Improve brand awareness directly to businesses also. Even though not trying to cater to business owners or drive direct traffic from them, it still creates brand awareness and trust once business owner knows contract through you.


Threats

  • Economic uncertainty amid Pandemic - Need continuous updates and any adjustments made quickly.

  • Government action against funding companies - Need to stay on top of govt lawsuits, other actions and stay within compliance

  • Laws for APR on MCA products

  • More sophisticated fraud tactics and occurrences


Conclusion

With this year being one unlike any other in our lifetime, it would be wise to use as many tools as possible when strategically planning for your business. It certainly doesn't stop with a SWOT analysis. Funders and loan brokers should be taking some basic steps to improve their business and this is one tool that will help as you move forward.



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