How to Offer Financing as a Contractor and Why

For most roofing companies, providing a sales estimate creates a simple yes/no scenario. Either the customer can afford the price, or they can't. But what if you could offer homeowners a third alternative, one that can help you close more contracts and permit owners to afford larger projects than their bank account might allow?

Here's why every roofer should consider having the ability to provide financing and how to offer financing as a contractor, even if the thought may seem a little intimidating.

Why Offer Financing?

Making financing available can build your business in three fundamental ways: It can help you close more contracts, it can increase your average job size and it can lock in payments.

Close More Contracts

Offering financing doesn't impact the quality of your work, but when it comes to sales and marketing, perception is reality. Companies with professional presentations and the ability to provide options like financing may seem more established to homeowners, even the ones who don't have any interest in obtaining a loan.

In addition to making your company feel more established, financing options can be the thing that convinces some indecisive homeowners to sign a contract. The honest truth is that most homeowners are daydreaming about a new kitchen or bathroom, not upgrading to dimensional shingles. For a customer with limited funds, the ability to break up payments over a number of months or years can be the determining factor in their decision-making.

Increase Job Size

Similarly, customers who finance a project are more likely to set up larger projects or may roll multiple projects into a single, lender-financed umbrella. For example, they might decide to bundle a home and a garage re-roof because it feels more affordable.

Payment Stability

Financing a job means guaranteed payments when it's time for a draw. The lender typically handles draw payments, so there's no more picking up a personal check that "should be good in a day or two." Having a financing plan can ease your cash flow worries and let you forget about chasing down slow-paying customers.

How to Offer Financing as a Contractor

There are two basic ways to offer customer financing: by self-financing or partnering with a trusted lender.

Self-Finance

Technically, you can finance jobs on your own. This involves setting up a payment plan that stretches out over months or years. While this might seem simple, there are a number of steps involved. You'll need to formalize lending documents, send monthly payment notices, calculate interest, collect payments and provide annual statements. And if you have an error in the interest balance or miss a detail in your state's lending laws, you could open yourself up to a lawsuit.

Self-financing loans can be a good option, but only if you're a roofer who has a background in finances or secretly wishes you were a banker. Otherwise, you're probably better off taking option number two.

Partner with a Trusted Lender

When you work with a dedicated lender, they can handle the red tape and paperwork that comes with financing applications.

When appraising potential partners, here's a list of things to consider:

• Do they understand roofing?
• If there's a lack of payment, what happens?
• How do their draw payments work?
• Do they offer immediate answers to applications? (See if they have a mobile app to handle this.)
• Are there hidden fees (for you or the homeowner)?
• What are the terms of the loan?
• Is there a prepayment penalty?

Homeowners are going to ask your sales team many of these questions, so look for a lender who has an FAQ page or printed materials you can hand to customers.

A Name You Can Trust

Beacon's Homeowner Financing program is user-friendly for both you and the homeowner. From your standpoint, you don't have to worry about hidden ACH or credit card terminal fees, and there are no activation fees and no sales slips.

For the homeowner, they can get under a new roof with no payments or interest for six months on a 120-month 9.99% interest loan. In addition, they can apply via a mobile app during the sales visit and get an instant response. There's no prepayment penalty, so it's a massive win for homeowners who only need a little breathing room until they have the cash in hand.

When a program is backed by Beacon, one of the most trusted names in roofing, you know it's a program run by and for roofers. If you or the homeowner have questions about financing options, you'll get a response from professionals who understand your project, because they've seen thousands of roofing projects go through financing.

Check out Beacon's Homeowner Financing program today to learn how it can help broaden your customer base, boost your bottom line and reduce paperwork and payment headaches.