Danny Green, owner of Solarshield Metal Roofing in Altoona, Pennsylvania, is a longtime believer in the value of offering multiple consumer financing options to his prospects and clients.
The metal roofing contractor says approximately 65 percent of its clients take advantage of the company’s financing options. Some seek to take advantage of a 12- or 18-month same-as-cash interest-free promotion that is offered periodically, while others look for the lowest possible monthly payment over several years.
There are a broad range of product offerings available from lenders. This helps sales pros to present a solution that fits their client’s needs. Credit worthiness is a big factor. For home improvement company owners, finding the right mix of consumer financing products requires a good working knowledge of your target clients as well as the products themselves.
“Offering financing is absolutely critical to our business,” says Green, who is a second-generation contractor. In 2022 the company will bill $6 million in revenue on approximately 350 metal roofing jobs with an average ticket of $25,000 to $50,000, Green adds.
Today, the company has relationships with three primary lenders. And that group of lenders has changed in recent years. The company is absorbing the cost of offering financing as part of its overhead, and those costs can be significant. That is why Green periodically evaluates those costs, which can vary from lender to lender based on their funding sources.
His current primary lender does not have a point-of-purchase app for quick approvals—which is becoming the norm in the industry—but the lender makes up for it with very low costs for borrowers with credit scores of 750 and above.
“If a home improvement company isn’t offering financing, it’s definitely leaving money on the table,” says Tim Musch, a former window company owner turned software executive who is co-host of the QR podcast Talking TOP 500. “Finance options should be offered when the price is presented.”
That’s why nearly all lenders who offer financing through contractors have teams devoted to supporting company owners and their sales teams as they incorporate financing options into their sales systems. Existing in-home sales presentations that have proven successful over time need to be carefully adjusted for maximum effect. The goal is to convert more presentations into sales as well as to create opportunities to increase the size of jobs.
Numbers Don’t Lie
A substantial body of research supports the effectiveness of contractors offering financing. Not only do financing options boost closing ratios and promote the sale of larger, higher-ticket job sizes, but they also improve cash flow, increase leads, inhibit discounting and reduce cancellations. A 2018 Brickyard Study commissioned by EnerBank USA, now merged with Regions Bank, backs up many of these conclusions.
More leads. Contractors who offer financing experience up to 50 percent increases in leads when “a choice of payment options” is included in marketing materials and on websites. And through greater customer satisfaction post-sale from clients who use flexible payment options, there is also a boost in referrals, the Brickyard Study found.
- Higher close rates. Offering payment options can double close ratios, the Brickyard Study found. Assuming a baseline closing ratio of 25 percent, closing rates jump to 44 percent when contractors offer a combination of same-as-cash and monthly payment loans.
- Bigger project sizes. The Brickyard Study found that one-third of homeowners “regret not spending more on their project to get the results they wanted.” Furthermore, the study found that clients spend over 40 percent more on home improvement projects when payment options are offered.
- Reduced cancellations. Clients who are approved for a loan are 94 percent more likely to complete the job with you, the study found.
Additional research bolsters these points. According to Improving America’s Housing, a 2019 report from Harvard University’s Joint Center for Housing Studies’ Remodeling Futures Program, credit options double the size of a project. When owners pay with savings or credit cards, average spending was $3,300. And when clients paid with contractor arranged financing, average project spending jumped to $6,500. (Qualified Remodeler magazine is a longtime member of Harvard University’s Remodeling Futures Steering Committee and supports its ongoing research efforts.)
The same Harvard report also collected data on the percentage of homeowners who utilized financing at various project price-points. For projects less than $10,000 only 22 percent used financing. For projects ranging from $10,000 to $49,999, 40 percent used financing. And for projects of $50,000 or more, 46 percent used financing.
The report also put forth statistics based on project types. Forty-six percent of homeowners embarking on a roofing project used financing. For siding projects, it was 40 percent. And for room additions, it was 36 percent.
Contractor Volume Is a Factor
Though the research shows that contractors of all sizes should offer financing, it can offer bigger benefits to large contractors who can commit to larger volumes of loan originations on a monthly and yearly basis. They have the power to negotiate slightly better terms, which can reduce their financing costs dramatically and help them boost profits. For the very largest companies, these cost savings can amount to millions each year.
At the other end of the spectrum, smaller contractors sometimes balk at the cost of offering financing. Some may have relationships with lenders but take the cost out of the commissions paid to sales staff on financed jobs. Because financing boosts closing ratios, these cost-recapture ideas can be self-defeating. Today, contractors of all sizes are learning more about different lenders and their various product offerings.
To that end, we’ve prepared a mini directory of lenders who offer home improvement financing through contractors. Our team cast a wide net to gather this information, but we may have missed a few. Please send those that we missed to Emily Blackburn at firstname.lastname@example.org, and we will be sure to add that information to our online edition. QR
Ally, one of the largest lenders in the U.S., offers affordable financing solutions to contractors, so their customers can pay for the products, repairs and renovations they need while also staying on track with a long-term budget. With no down payment or application fees, no credit impact pre-qualification, and budget-friendly financing solutions, Ally works with home improvement providers to help consumers afford the things they need. For more information, and to partner with Ally, go to ally.com.
Aqua Finance works with dealers, contractors and retailers to offer financing to homeowners looking to remodel or otherwise add value-enhancing home improvements to their home. Aqua offers competitive consumer financing programs to a wide variety of businesses, helping consumers make large purchases in small installments. For more information, and to partner with Aqua Finance, go to aquafinance.com/dealers.
Atlanticus facilitates financial solutions to its consumers’ needs, leveraging technology to enable their bank partners to bring financial solutions to their customers.
Client Pay is a simple, web-based solution designed specifically for architecture, engineering, design and construction professionals. Client Pay gives these professionals the ability to securely accept credit, debit and eCheck payments from anywhere. Offering straightforward, competitive pricing models, with no long-term contracts, set-up fees or cancellation penalties, Client Pay is available with processing fees as low as 0 percent, dependent on the payment technology.
For more information, and to partner with Client Pay, go to clientpay.com/sign-up.
Foundation Finance offers financing programs through dealers and contractors who have been approved to offer consumer financing to their customers. Through working with qualified contractors and dealers, Foundation Finance offers either revolving lines of credit or installment loans, both available with no-prepayment penalties and fixed interest rates. For more information, and to partner with Foundation Finance, go to foundationfinance.com/dealer-login.
GreenSky customers can apply using their mobile phone app or by phone, and credit decisions are delivered in seconds. GreenSky works with home improvement contractors and retailers to provide financing services to their customers, facilitating loans up to $65,000. For more information, and to partner with GreenSky, go to greensky.com/home-improvement.
HFS Financial is a lending platform that offers hassle-free, unsecured swimming pool and home improvement loan solutions. With loan amounts up to $500,000, homeowners can tackle their projects immediately, receiving the full amount of their financing upfront and hassle-free. There are no contractor or dealer fees when partnering with HFS and no money down. For more information, and to partner with HFS Financial, go to hfsfinancial.net/contractors.
With nationwide fixed rates as low as 4.99 percent for unsecured loans, up to 20-year terms and amounts up to $200,000, Lyon Financial offers financial solutions for swimming pool and home improvement loans. They offer personalized, hassle-free solutions, eliminating the need for lengthy loan processes, allowing consumers to quickly and conveniently bring their home improvement goals to life. For more information, and to partner with Lyon Financial, go to
OpenPay is a finance-technology company that develops online payment solutions which feature “buy now, pay later” services. OpenPay provides financial services that allow for users to purchase items or services now and pay them off with interest-free installments. Their focus is on large cash flow management such as healthcare, automotive, and home improvement purchases. For more information, and to partner with OpenPay, go to openpay.com.
PowerPay connects homeowners and contractors to loans up to $100,000 with rates starting at 2.99 percent with soft pull, instant approvals, and no prepayment penalties. Power Pay has up to 20-year term, no prepayment penalties, and an application that only takes two minutes to fill out. For more information, and to partner with PowerPay, go to getpowerpay.com/contractor-financing.
Pure Finance Group
Pure Finance Group offers customized financial solutions for a businesses or homeowners. Pure Finance Group offers a variety of different payment platforms to ensure homeowners’ lending needs are met. They work with contractors to provide customers an alternative to cash-on-hand payment plans, offering unsecured loans and fixed APRs for all home improvement needs. For more information, and to partner with Pure Finance Group, go to purefinancegroup.com/new-dealer.
RenoFi Loans use after renovation value instead of current value to determine loan value, enabling the most borrowing power at the lowest rates. With loan amounts up to $500,000, homeowners can borrow up to 90 percent of the after renovation value while keeping their existing mortgage. For more information, and to partner with RenoFi, go to renofi.com.
Service Finance Company, LLC, is a nationally licensed sales finance company and an approved FHA Title I Lender. It provides more than 500 different financing solutions to home improvement contractors enrolled in the SFC Financing Program, providing customers the ability to finance home improvement purchases. For more information, and to partner with Service Finance, go to form.jotform.com/201545352977966.
Sunlight Financial offers payment-friendly financing and industry-leading technology to hep contractors grow their solar and home improvement businesses. Sunlight Financial partners with contractors nationwide to offer homeowners affordable loans for modern home upgrades. Partnering with Sunlight Financial gives consumers the opportunity to take out loans with highly competitive rates, with a wide array of contractor financing options, flexible APRs and payment terms, as well as stable and diverse sources of capital. For more information, and to partner with Sunlight Financial, go to sunlightfinancial.com/home-improvement.
Synchrony is one of the premiere consumer financing services companies that offers promotional consumer financing products, including credit, promotional financing and loyalty programs, installment lending, and FDIC-insured consumer savings products. For more information, and to partner with Synchrony, go to synchronybusiness.com/#syf-contactus-form.
Upgrade offers unlimited cash back on payments and personal loans up to $50,000. Designed with ease, speed,and simplicity in mind, customers can customize their offer by choosing from multiple load options with fixed rates and terms and no prepayment fees. For more information, and to partner with Upgrade, go to upgrade.com.
Watercress Financial is exclusively focused on financing home improvement projects through providing home improvement financing options that benefit both contractor partners and homeowners. Offering instant, hassle-free loan approvals with no hidden costs, Watercress offers a variety of financing programs and solutions. For more information, and to partner with Watercress Financial, go to watercressgroup.com/contractors.
Wells Fargo offers a variety of loans, from personal to home, with rates as low as 5.99 percent APR, customizable loans from $3,000 to $100,000, and flexible terms from 12 to 84 months. This, in addition to competitive fixed interest rates and relationship discounts for qualified customers, makes Wells Fargo a popular choice among those looking for finance options for their home or customers. For more information, and to partner with Wells Fargo, go to wellsfargo.com/biz/merchant.