Loans aren’t just for banks anymore.

Imagine visiting an accountant to get a small-business loan. Or getting an automobile loan from an insurance agent. Those scenarios are becoming a reality with a new program being offered by Vertical Lend.

Long Island, N.Y.-based Vertical Lend, formerly known as The Mortgage Warehouse, is turning non-traditional lenders across the country into one-stop shopping financial centers. Independent accountants, insurance agents and financial planners who join the program can originate everything from home and auto to small-business loans – and get compensated for it.

“We’ve taken loans to a whole other level,” said Vertical Lend President David Peskin.

Many consumers already seek advice from their personal accountants or financial planners when undertaking a loan, looking to double-check the numbers with someone they trust.

“We decided it would make a lot of sense to have these professionals do loans themselves,” Peskin said.

Recent changes in the law allowing accountants to receive compensation cleared the way for Vertical Lend to become a pioneer in loan origination from independent professionals.

“Accountants used to have to refer their clients to a bank or someone down the street. At some point, banks started soliciting [their] business,” Peskin said. “Deregulation … has opened up new doors for accountants.”

Vertical Lend, which relies heavily on Internet technology, is different from other Internet-based loan sites such as in that it is strictly business-to-business, rather than consumer-oriented, according to Peskin.

“The reason most Web sites dealing with mortgages are not working is because most people want to meet who they’re dealing with. They need to be hand-held,” Peskin said.

As do the independent professionals who become Vertical Lend associates. The way it works is this: A financial services client logs on to the Vertical Lend Web site and plugs in the information about a loan applicant. A Vertical Lend loan specialist assigned to the client processes the information and works with him or her on a one-to-one basis, either by phone or via e-mail; approval can be granted in minutes in some cases.

After going through an initial training period with an application kit and following the Web site’s step-by-step directions, a financial professional can be up and running “instantaneously,” according to Peskin.

‘Rapport and Trust’

Armand Arce, president and owner of Taxes & More in East Longmeadow, had been looking for a way to diversify his business, perhaps through an association with a banker or lender.

Industry trends such as consolidation of financial service companies, e-commerce financial services and the passage of the Gramm-Leach-Bliley financial modernization act allowing banks and other institutions to expand their product offerings have all contributed to a sort of “recession” among smaller companies which are still independent, according to Arce.

Arce found out about Vertical Lend through a flier, investigated the company, and has now been a Vertical Lend associate for about four months.

“It’s easy – easy access and availability, and they do seem to get back to you quickly,” said Arce, whose business is a complete accounting, bookkeeping and tax firm in operation since 1987.

“In my particular situation, it allows me the ability to promote my services to present clients, and I’ve also seen interest from non-clients who have found out through word-of-mouth,” he added. “It seems to be conducive because, one, they’ve dealt with my company in the past, and two, there seems to be some sort of rapport and trust.”

‘Network of Business’
Consumers get the added comfort of getting a loan through someone they know and trust, and the professionals they trust get the constant support and advice they need from their designated Vertical Lend loan specialist, said Peskin. The program also provides financial services providers compensation for work and advice some have given for years without reward. The average compensation per loan per associate is $1,000 to $1,500, said Peskin, a reward which is paid directly by Vertical Lend.

“ has to advertise like crazy to drive people to their site. We don’t have to, because we’re building a network of business,” Peskin said. “We have no advertising costs, no sales department, because [associates] become the advertisements by word-of-mouth. Therefore, we can afford to get them compensation.”

The program is also structured so that there is no incentive for associates to jack up fees or shortchange their clients, Peskin added. And, unlike banks that sometimes offer only particular in-house loan products, Vertical Lend associates can offer a full range of products from more than 50 different lending sources.

Vertical Lend has been launched, and licensed, mainly in New York, Connecticut, Michigan and Ohio, with 17 more states just added, Massachusetts among them. The company plans to become truly national, with a presence in all states, within a year from now, as well as to double its membership to nearly 1,000 associates by the end of 2000.

The company plans to extend its offerings as well, with commercial mortgage loans to be added in the near future.

Vertical Lend has already established an exclusive partnership with Business Loan Center, a nationwide Small Business Administration lender, to provide government-guaranteed small-business loans.

Vertical Lend is also seeking to establish working partnerships with tax preparation software companies, so that professionals who already have all their clients’ information stored in such programs can upload them into the Vertical Lend Web site to get even faster loan approval.

But aside from speedy approval, the biggest benefit to consumers, said Peskin, is “working with someone they know and trust. It really simplifies the process.”

Web Firm Taps Accountants For Loan Origination Services

by Banker & Tradesman time to read: 4 min