How to Secure Contractor Financing - Tips and Strategies for Success

How to Secure Contractor Financing - Tips and Strategies for Success
How to Secure Contractor Financing

Contractors that offer financing can increase sales and job size while improving close rates. This allows customers to choose affordable monthly payments through a 3rd party.

Small contracting businesses need working capital to buy equipment and pay employees. Contractor financing gives you access to funding based on business contracts and invoices.

Know Your Limits

When it comes to contractor financing, there are a variety of options. Some contractors use business credit cards to gain funding, while others secure financing through lending networks like Acorn Finance. These companies remove the contractor as a middle-man by connecting the customer to lenders that can provide them with a personal loan.

This allows customers to quickly check offers without impacting their credit scores. Contractors that offer customer financing see their close rates increase and can increase average job size and revenue.

Cash flow strain is a reality for all contractors, and having the option to finance projects can reduce project delays and cancellations and even allow them to do more work.

When customers know they can get the product or service they want for an affordable monthly payment, it makes them more likely to buy. This can improve customer satisfaction and help you close more sales. Having access to funds faster can also speed up the project start date.

Know Your Lender

Contractor financing allows contractors to close more projects and increase sales. The most important thing is to partner with a financing company committed to helping their clients succeed and give them the tools and support they need to make it work for them.

Lenders usually want to see a contract, an estimate that outlines the milestones of the project and the customer’s ability to pay.

Some contractors offer in-house financing, while others leave it to third-party lending network companies such as Acorn Finance. Acorn Finance partners with contractors and gives them a platform to help their customers check offers quickly and easily without impacting their credit scores.

They also provide their contractors with specialized regular training and monthly data analytics for free. This helps to keep them on top of their game. They also charge no dealer fees and do not take a cut of the customer’s loan amount.

Know Your Options

Many financing options are available to contractors, but it’s important to know which ones are the best fit for your business. Each type of loan is designed for a specific purpose and will help you achieve different goals.

For example, a contractor loan may be the right option for covering mobilization costs on a new contract, but it would be a bad fit for restructuring debt or launching a marketing campaign.

Contractors often have to pay their workers and purchase materials before they receive payment from customers. This can leave them with large up-front expenses that are hard to cover with just cash in the bank.

One way to combat this issue is by offering customer financing. This can help you increase your closing ratio, provide guaranteed payment, and improve customer satisfaction. It can also allow you to work on larger projects and increase your average job size.

Know Yourself

Many customers can’t afford to pay for the service they need upfront, so they seek companies that offer contractor financing. This simplifies the process and allows them to add it to their monthly budget instead of making a big purchase simultaneously. When contractors offer financing, they must be confident in their partner lender.

The best contractor financing programs will be stable and secure and offer a variety of loans designed to suit the needs of contractors and homeowners alike. They will also offer a dedicated support team with specialized regular training and monthly data analytics.

Offering contractor financing takes time to consult with each potential customer about their financing options. This can be a positive or negative for some, but if it increases your sales in the long run, it’s worth the extra effort. Include a payment incentive in your contract to encourage clients to pay quickly.
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