Using Homeowner Financing Options To Grow Your Roofing Business

As a business owner, one of the hardest parts of selling a project is closing the sale. Homeowners are often surprised and overwhelmed by the total cost of the job, causing them to push back or flat-out say “no” to your project.

The reality is that there aren’t many customers who have the cash to pay upfront for a roofing project without some kind of home improvement financing. If you can’t offer them a resource for financial assistance, they’ll likely take their business elsewhere to roofing contractors that finance home renovations with monthly payments.

To increase your sales and generate more profit, you need to offer your customers attractive home improvement finance company options that will allow them not only to say “yes” to your project, but to even include upgrades that they wouldn’t have considered before.

Before diving into how you can offer financing to your customers, let’s dive deeper into why contractor financing is a wise investment.

Why Contractors Should Use Home Improvement Financing

There are several benefits contractors can gain from offering home improvement financing to homeowners: 

• Increase Your Revenue: Providing your customers with a variety of flexible payment options, along with potential upgrades, may increase your overall revenue. For instance, a homeowner who is presented with an upgraded home improvement project and an accompanying lower-than-expected monthly payment will most likely spend more money.
• Gain a Competitive Advantage: Offering financial assistance can make your services seem more appealing, helping you both close sales more easily and generate more leads coming to your business for financing options.
• Get Paid in Full: If you work with a third-party financing company (more on this later), you can still get the full payment upfront while the homeowner deals with their monthly payments.

How Homeowners Benefit from Contractor Financing

Your business isn’t the only one that gains the advantage from offering financing options — homeowners can benefit as well:

• Easier Decision-Making Process: It can be hard to make a decision with a huge price tag looming over your head. Monthly payments can break up that financial stress so they can make faster decisions on what projects they want done on their roof.

• Flexible Payment Options: Homeowners can customize their loan terms to best suit their needs, giving them greater control over their finances.

• Fast Application Process: Applying for a loan is easy and homeowners can usually find out if they’re approved the same day they apply (depending on the lender).

How Does Contractor Financing Work?

There are two main ways to offer financing as a contractor: In-house financing and third-party financing. In-house financing is when you act as the creditor and are responsible for the entire lending process. This gives you full control over the payment process, but adds a lot of additional administrative responsibilities — you also risk not getting paid at all. 

Working with a third-party financing partner outsources the entire process, giving you more time to do actual contracting work. If you partner with a home improvement financing company, you also can ensure that you get paid upfront for the project.

Per best practices for business banking, make sure to compare lending partner options to get the best deal for both homeowners and your business.

How to Offer Financing as a Contractor

Once you’ve established how you’ll offer contractor financing for your homeowner’s project, you can bake the offer into your typical marketing and sales efforts.

1. Offer Financing as an Option: Offer homeowners the option to pay it all at once so the total cost is clear. Doing so can also make project financing seem more appealing, versus offering financing and nothing else.
2. Send an Estimate: To ensure financing is a viable option for the homeowner, send them an estimate of monthly payments and the duration of the payment terms. Most lenders will offer some customization options so homeowners can settle on terms they’re comfortable with.
3. Have Customers Apply: Lenders want to make sure homeowners can make the payments on time, so you’ll need an application from the homeowner to run a credit check and verify financial information.
4. Approve the Application: If all comes out well on the credit check, inform the homeowner that their application was approved.
5. Receive Funds: You’ll get the funds right away from a third-party lender, or you’ll get your first payment from the homeowner. Then you can get to work!

How to Partner With a Home Improvement Finance Company

There are many home improvement financing companies in the market, so it is important that you compare lender offerings to determine how you could benefit from partnering with them. 

Some features to consider when evaluating financing companies for contractors are:

• How the financing program works for you and for the homeowner.
• The contractor fees for using the lending service (our ROOFPRO members have access to homeowner financing partnerships with attractive discounts and reduced fees).
• Marketing resources and training to help grow your business.
• The company’s privacy policies and how they protect your data.

 

Most financing companies will ask for some documentation on your business to get you approved as a partner — requirements may vary. Once the vetting process is completed and you are cleared, you will have access to the resources and tools to start offering financing as part of your sales pitch to your customers.

Best Practices When Offering Financing

As a business owner, you want to use financing as a customer benefit for doing business with you. Make financing a part of your presentation, not a separate discussion, to help inform, guide and ease your customers in their decision-making process.

Offering homeowner financing options can be a great pathway to increase your sales, project size and revenues and, ultimately, grow your business. Visit the Partner Page on the IKO ROOFPRO portal to review a list of financing partners available.