Empowering Home Improvement Contractors: The Strategic Benefits of Offering Financing Programs to Customers
By Bradley Mix | January 31, 2024
Homeowners often face the challenge of undertaking costly home improvement projects, such as installing a new roof or a whole-house water filtration system, without the immediate ability to pay in cash. The solution that home improvement contractors can provide is a seamless and affordable way to finance these projects. While the concept of financing might seem challenging, the true hurdle lies in guiding homeowners towards a feasible financing option. Numerous finance companies specialize in collaborating with home improvement contractors, offering loans tailored for high dollar projects. This article explores the strategic benefits of integrating financing programs, how contractors establish partnerships with finance companies, and showcasing key players like EnerBank USA , GreenSky, Enhancify, Ally Lending, Acorn Finance, and Hearth.
Unique Advantages of Offering Financing Programs
Offering financing options not only increases sales but also unlocks unique advantages, enabling contractors to secure more projects, broaden their customer base, and cultivate long-term business growth. Below are a few noteworthy advantages:
- Increased Close Rates: Providing financing options significantly boosts close rates on sales by addressing potential customers’ financial concerns. Homeowners are more inclined to commit to a project when they can distribute the cost into manageable monthly payments, resulting in higher close rates for contractors.
- Empowering Larger Purchases: Financing programs empower customers to undertake more substantial projects that might have been financially challenging otherwise. Whether it’s a comprehensive kitchen remodel or an extensive roofing project, breaking down the cost into affordable installments encourages customers to invest in larger home improvements.
- Competitive Advantage: In a saturated market, setting oneself apart is crucial. Offering financing options becomes a distinctive feature that makes a contractor more attractive to potential customers. Homeowners are more likely to choose a contractor that provides flexible payment solutions, giving the business a competitive edge.
- Boost in Sales: The immediate impact of financing programs is a boost in overall sales. The accessibility of financing attracts a broader spectrum of clients, including those who might have deferred their home improvement projects due to budget constraints. Contractors experience a surge in demand as more customers find their services affordable through financing.
Partnering with Finance Companies for Success
Home contractors should establish partnerships with finance companies by going through the process mentioned below:
- Identifying Finance Companies: To implement financing programs effectively, contractors must identify finance companies specializing in working with home improvement professionals. Renowned companies like EnerBank USA (Website: www.enerbank.com) and GreenSky (Website: www.greensky.com) are committed to partnering with contractors to offer tailored financing solutions.
- Application Process: The application process for contractor-focused finance companies is designed to be efficient and contractor-friendly. Contractors can submit applications online, providing basic information about their business and the types of financing programs they wish to offer. A swift approval process ensures that contractors can seamlessly integrate financing into their sales strategies.
- Loan Terms and Conditions: Finance companies catering to home improvement contractors typically offer flexible loan terms to accommodate both the contractor and the customer. Long-term repayment plans with competitive interest rates make financing an attractive option for homeowners. Additionally, these companies often provide promotional periods with zero or low-interest rates, enticing customers further.
Advantages and Drawbacks of Offering Financing Programs to Customers
- Advantages
- Specialization: Finance companies specializing in contractor partnerships understand the unique needs of the industry, tailoring their offerings accordingly.
- Customer-Friendly Terms: The loan terms are designed to be homeowner-friendly, making it easier for customers to commit to larger projects.
- Streamlined Processes: The application and approval processes are streamlined, minimizing administrative hassles for contractors.
- Drawbacks
- Interest Rates: While competitive, interest rates can be higher than traditional financing options, and customers should be made aware of this during the sales process.
- Credit Approval: Some customers may not qualify for financing, potentially leading to lost sales opportunities.
Companies Offering Financing For Home Improvement Projects
- Enhancify (Website: www.enhancify.com)
- Ally Lending (Website: www.allylending.com)
- Acorn Finance (Website: www.acornfinance.com)
- Hearth (Website: www.gethearth.com)
Streamlined Process and Customer Satisfaction
Financing programs simplify the buying process for homeowners, making it more straightforward for them to afford the products or services they desire. By offering financing as part of their services, contractors provide a comprehensive solution that addresses both the practical and financial aspects of a home improvement project. This streamlined approach enhances customer satisfaction, as homeowners can embark on their projects with confidence, knowing they have a manageable and affordable payment plan in place.
Implementing a financing program in collaboration with reputable finance companies is a strategic move that significantly benefits home improvement contractors. These partnerships offer unique advantages, empowering contractors to close more jobs, expand their customer base, and foster long-term business growth. In an evolving home improvement industry, financing programs are becoming integral tools for contractors striving for sustained success.
Brad Mix
Consultants, Growth Acceleration Consultants, Manatee, Mix, SarasotaSpecialty: Capital Access, Startup Brad Mix has more than 20 years of experience in the financial services industry and as a business consultant. Prior to joining the Florida SBDC at USF, Mix provided consulting services to more than 2,500 businesses and assisted business owners in securing more than $100 million in capital and $60 million in government contracts. He has extensive experience with SBA loans, including 504s, Community Advantage loans, and microloans. In addition, he assists business owners in preparing business plans, financial projections, profitability improvement, business acquisitions, business valuations, marketing and capital solutions. He joined the Florida SBDC at USF in April 2020, after spending 20 years as a consultant and satellite manager for the Coachella Valley SBDC, located in Palm Springs, Ca. In 2005, he was awarded the California State Star Award by the California SBDC Network. He is a certified Associate Business Continuity Professional (ABCP).