3 Signs You Should Offer Home Improvement Financing to Customers
by Medallion Bank | June 16, 2022
With a hot housing market, many home improvement contractors are preparing for a busy 2022. In order to maintain consistent growth, it’s critical to have systems in place to support your business. This can range from marketing and equipment, all the way to offering home improvement financing options.
But how can you be sure you’re ready to provide financing for your customers? We’ve outlined four signs that indicate when contractors are ready to scale with financing support.
1. How long have you been in business?
Stability is an important factor for any lender. With any new business, there are risks associated with startups, such as cash flow, competition, and retention. The longer a contractor has been in business, the more trustworthy they become. Typically, lenders will require a business to have operated for at least two years in order to qualify for financing.
If you’ve been in business longer than two years, it’s time to consider offering financing to your home improvement customers. This will allow your business to close on larger projects and scale your business.
2. Do you have a stable and consistent annual revenue?
Sometimes years in business is not a complete indicator of business success. It must be coupled with provable annual income. This shows that contractors understand the daily operations, risks, sales requirements, and processes to ensure long-term growth. Lending partners see this as a positive indicator of future success, which they will gladly support.
If you have at least $1 million in annual revenue, it’s time to take the next step in business growth. You’ve established a proven record of success, which means that trend will likely continue as you offer financing.
3. Do you have a positive BBB rating?
How do your customers feel about your home improvement services? As you provide high quality services, your customers are likely to give you great reviews. This leads to referrals and a positive reputation in your community. A lower BBB rating can be a risk to a lender because customers can associate your business with the lender. This creates a ripple effect, which can negatively impact a lender’s reputation.
If you provide great services to your customers, you should have nothing to worry about. With a positive BBB rating, you can offer financing to your customers and continually grow your business.
