Every article on non-interest income for community banks recommends the same four things. Treasury management. Card interchange. Wealth management. International payments. The advice is not wrong. It is just the advice everyone already took.
There is a fifth answer that almost never makes the list. A factoring participation generates fee income from customers your bank is already declining, and it does it without a new division, a new hire, or a new platform.
The math is the part bankers do not expect. Half of a factoring facility earns your bank more than the whole of a conventional line on the same relationship. You are not splitting a smaller pie. You are participating at fifty percent in a facility priced for the work it requires, on a customer who was going to be a referral out the door.
Your outstandings go up. Your fee income goes up. And the loan you were going to decline becomes an asset you own half of.
Where the Fee Income Actually Comes From
Look at your decline file. Not the deals that were never bankable. The ones your credit committee turned down because the company was too young, too thin, or growing faster than its balance sheet could carry.
Those companies have creditworthy commercial customers and real receivables. They are financeable against collateral even when they are not financeable against financials. Right now they leave your bank and go to a merchant cash advance, a broker, or the bank three towns over.
The alternative is funding them against verified receivables, earning fee income on the facility, and keeping the deposit relationship you have already spent years building.
Building this yourself costs a division manager, a credit manager, a salesperson, software and legal documentation. Roughly half a million a year before your first funding. Participating with us costs a $25,000 setup and about thirty days.
If you are looking for fee income that does not require new overhead, schedule a call and we will run the numbers against your own decline file.