The Expectations vs. Realities of Contractor Financing

Posted September 12, 2023 by Regions Home Improvement Financing

If you’ve never offered contractor financing before, you may have some pre-conceived ideas of how it works. The reality is that your experience is heavily dependent on which lender you use, and they’re not all the same. Check out some of the expectations vs. realities when you work with Regions | EnerBank USA.

Expectation: Customers Are Using Cash For Their Projects

Reality: As a contractor, it may appear as though many of your customers are using cash, but that’s not necessarily the case. In 2016, we commissioned the Bain Report which showed that 50% of jobs over $5000 are financed in some way. This means that you’re missing out on a huge opportunity to close more jobs by offering your own financing.

Unsecured loans from EnerBank are an attractive option because no collateral is needed, and the turnaround is quick.

Expectation: Homeowners Are Using Financing Because They Have No Other Option

Reality: In the Brickyard Study we commissioned in 2018, the top two reasons that homeowners use financing are flexibility and convenience. This is even true for customers who were planning on using cash they have on hand for their project.

This is because of the unique loans we offer, such as our Same-As-Cash loan. With this option, customers can hold onto their cash while the project is taking place. It’s also a great solution for those waiting on money to come in, such as a tax refund. If the loan is paid back in the Same-As-Cash period, no interest is owed.

Expectation: Adding Financing to My Sales Process Will Slow it Down

Reality: Here at EnerBank, we’re constantly working to ensure our technology makes things as easy as possible for you. For example, we’ve introduced PreQualify which allows your customers to see how much of a loan they may qualify for before they apply. Not only can this empower them to expand the scope of the job, but it allows you to better recommend products.

Plus, with paperless application methods and fast credit decisions, you can close more jobs in less time. This makes you more efficient and allows you to better allocate your valuable time. With additional features, you don’t need to chase down customers to collect signatures or payments. You can make payment requests in our online reporting tool and funds are sent to your account via ACH.

Expectation: Offering Financing is a Great Way to Save a Sale

Reality: To get the most out of your loan program, we recommend mentioning the availability of payment options at these three touchpoints:

In your marketing
When setting the appointment
During the sales bid

For many customers, their home renovation project doesn’t start when the contractor walks through the door, it starts with research. Homeowners will spend hours on websites, reading reviews, and looking at photos to find contractors. If they already know you provide convenient financing, it makes it more likely they’ll reach out.

Once they make contact, remind them you offer financing and will provide more information during the appointment. Finally, once you’re in the home, mention payment options again at both the top and when you present the bid. This can circumvent any possible sticker shock the homeowner may experience.

If they complete the application, you have a great chance at closing the job! The Brickyard Study showed that a homeowner who receive approval for a loan with EnerBank completes the job with you 94% of the time.

Expectation: Getting the Help I Need for My Program Will Be Difficult

Reality: We know you’re busy, and that you don’t have the time to play phone tag or wait on hold. That’s why, as a part of your loan program, you’ll be assigned your own relationship manager. This person will be your main point of contact at the bank. So, whether you need help with loans, your marketing, or training your team, they’ll be there for you.