From lawsuits to licensing crackdowns, AI threats to economic jitters, 2025 is not an easy ride for brokers. Ken Greene breaks down the nine biggest hurdles ahead.
I had the privilege to serve as General Counsel to the American Association of Commercial Finance Brokers from 2017 through 2024. During my tenure, I became intimately familiar with the broker segment of the commercial finance industry as I developed professional and personal relationships with many association members.
A prevalent theme during my tenure was survival. There was, and presumably still is, palpable fear and uncertainty in the broker community as to whether that profession remains a viable business model given the changes that have impacted the entire finance industry. This article discusses nine major challenges ahead for brokers.*
1. THE ECONOMY
Economic instability creates increased risk aversion, tighter lending criteria, higher interest rates and attendant reduced loan availability. Many experts, including those at J.P.Morgan Chase and Goldman Sachs, as well as Apollo’s chief economist Torsten Sløk, believe the U.S. is headed towards recession. Whether or not that is accurate, according to the U.S. Bureau of Economic Analysis, U.S. GDP is shrinking, consumer spending is slowing and tariffs are a major source of disruption and concern. On the other hand, the recent passage of the “Big Beautiful Bill” could provide borrowers with incentives that offset small business caution by providing enhanced tax deductions. Only time will tell.
2. TECHNOLOGY & AI
Technology can assist the broker by creating more efficient, streamlined methods of processing loan and lease applications. CRM systems are excellent tools for organizing and automating the client lifecycle. Digital document management is an invaluable means of preserving and retrieving data. E-signatures ease the application process and allow for rapid credit decisions and loan funding. But evolving technology also creates elevated expectations. Brokers who are unable to keep up with the latest tech might face customer dissatisfaction with a low-tech transaction. Similarly, those accustomed to the old way of doing things could lose their competitive edge. Additionally, artificial intelligence is a wild card and potential game-changer as technology replaces human beings in the workforce. Is it just a matter of time before lenders use AI to replace brokers? Some say AI will not replace loan brokers, but loan brokers who use AI might conceivably replace those who don’t!
3. LICENSING & REGISTRATION
My friend Kit West from C.H. Brown Co., an A-list lender that deals with many brokers, said it best. Brokers are “the last Wild West sector of the business industry, largely because anyone can become a broker.” When I started out in this industry in 1981, this was indeed the case. Forty-four years later, so much has changed. Certain states now require brokers to be licensed, and some, like California, have arduous licensing requirements. States that do not mandate licensing may still require registration. The downside of licensing and registration includes legal fees, annual reporting requirements and restrictions on certain activities. California, for instance, prohibits licensed brokers from transacting business with unlicensed, non-exempt lenders. Many brokers have left California for that reason.
4. LITIGATION MADNESS & OVERWHELMED COURTS
We live in a litigious world. Disputes are no longer resolved by shoot-outs at dawn, but lawyers are the modern-day analog to the hired gun. If someone doesn’t like the result of a business transaction, they might file a lawsuit, whether or not their claim has any legal or factual merit. Consequently, the courts are jammed with lawsuits, legitimate and frivolous. Despite fast-track efforts by many states, it can still take several years and cost thousands and thousands of dollars to pursue or defend a claim. Forget about the old maxim “justice delayed is justice denied.” It can still take years before any case goes to trial.
5. SECURITY & PRIVACY LAWS
Perhaps one of the most daunting challenges in the business world today concerns the security and privacy of information. It seems that data breaches are everyday occurrences, and the state legislatures have responded accordingly. As usual, California leads the way in complex laws intended to protect its people, whether in the consumer or commercial context, from invasive use and misuse of their private information. The California Consumer Privacy Act of 2018 (CCPA) and its stepchild, the California Privacy Rights Act (CPRA), created new privacy rights for Californians and significant new data protection obligations for businesses. Twenty other states, including New Jersey, Delaware, Florida and Connecticut, have similar laws. The laws are comprehensive and impact the content of websites, written communications and, to some degree, verbal communications.
6. FRAUD
Although this has been a problem in every aspect of life for many years, the perfect storm of a recessionary economy, social anomie, and the dark side of technology has created something out of a Mary Shelley Book. Ransomware, malware, spoofs, scams, phishing, stolen identities and wire fraud, to name a few, plague the business world like Shelley’s unleashed monster. Every time you open an email or visit a website, you run the risk of data theft. When the phone rings, it’s often a guy named Spam. Even if you are cautious, you might wake up one day to find that your bank accounts have been hacked. It’s a trap for the unwary and, unfortunately, for the hypervigilant as well.
7. BORROWER SOPHISTICATION
Armed with an arsenal of tech tools, borrowers can easily avail themselves of sophisticated financial calculators and ChatGPT “professionals” to help them better understand contracts and increase their bargaining power at the outset of a transaction. ChatGPT and similar resources can also provide free legal support for distressed borrowers dealing with collectors or lawsuits. I have two cases in which a borrower/guarantor sued the lender because the equipment was not delivered on time and did not work properly. Although the loan agreement has clear, enforceable waivers of equipment warranties, the aggrieved customer in one case has managed to cobble together legal pleadings and file a lawsuit in pro per that he is able to drag on because of his free online legal counsel.
8. ESCALATING COMPETITION
There are more brokers than ever. According to IBISWorld, there are 21,460 equipment finance brokers in the United States alone, up from 20,350 in 2024, an increase of more than 5%. The more competition, the more the other challenges come into play, like the need for brokers to be more tech savvy or more willing to yield to lenders’ demands in their broker agreements.
9. LENDER ISSUES
Last but hopefully least on the list of broker challenges are those posed by the lenders. As stated above, there are many more brokers than there were 10 years ago. It is not entirely clear that the same is true of lenders once you remove alternative finance from the equation. That delta necessarily means that lenders can be more selective in choosing brokers, and their broker agreements can be adjusted accordingly. An example is a provision I saw recently, which stated that the lender would not be liable for circumvention, whether intentional or unintentional. This provision was non-negotiable, so my broker client walked.
This might seem like doomsday prognostication, but it is not. My personal belief is that it is simply the latest hand of cards dealt to savvy players who have either faced adversity before or who have learned from their elders who have survived similar challenges. The equipment finance industry, including brokers and dealers alike, has faced financial, legal, judicial, administrative, accounting and technological problems since the industry took root in the middle of the last century. It has shown an uncanny resilience and adaptability in clearing these hurdles and is consequently larger and more successful than it has historically been. If I were a betting man, I would put my money on the broker industry to not only survive, but to thrive. *I am aware that “Top 10” lists are more fashionable. I just couldn’t think of a tenth challenge that really merited discussion. I guess I’d rather be precise than vague! •
Ken Greene is an attorney at his SoCal firm, the Law Office of Kenneth Charles Greene. The Law Offices of Kenneth Charles Greene present this article.
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