Customer Financing - Contractor Talk - Professional Construction and Remodeling Forum

HallamContract · 05-07-2008, 10:22 AM

Do any of you GCs out there offer financing for customers? If so, how do you do it? Do you work with banks? I know some GCs who also run financing companies. Does anyone know how this works and one might get started with it?

woodman42 · 05-07-2008, 11:15 AM

I tried financing a customer once, half way through their repayment, they moved and I never heard from them again.
If financing is something you think you really want to do, I would get a lawyer and a CPA to get you set up and put in place the necessary instruments to protect yourself.

HallamContract · 05-07-2008, 11:22 AM

I was thinking more along the lines of getting involved with financing institutions for 2 reasons. A. To see if our prospective clients even have the money to do the jobs they want to do and B. to help get them financing so it's one step they don't have to do themselves.
Any thoughts?

Dale S. · 05-07-2008, 01:29 PM

We offer customer job financing thru GE Money:
http://www.gemoney.com/small_business/index.html

Here is how it works:
1) We go thru the sales process and get the customer to a point of a bid
2) The customer fills out a 1/3 page app for credit
3) We enter the pertinent data into a terminal that also processes our regular credit card transactions. This is a simple process and the messages on the terminal lead you thru it step by step
4) An answer comes back within 5-10 seconds and let's both the customer and us know what their credit amount is
5) The cust excepts the job and we charge it out in 1/3 payment amounts as the job progresses; 1/3 at contract signing, 1/3 at time of work on the house, 1/3 when job is complete
6) At each charge out time, we get the amount credited into our bank account: i.e. for a $5K job, we get $1667 at each charge out
7) The customer then deals directly with GE Money for repayment: we are completely out of the loop and have no further involvement with customer payment issues
8) Once a month we get charged a percentage rate based on the transaction payment plan chosen. This is a deduction from our bank account.

Their are a whole variety of payment options available, from 90 days same as cash to 12 months no interest, no payments. We get to pick and choose what we want to offer. The offer we most often use is the 12 months financing, no interest, no payments. This transaction costs us 7.65% of the amount. It is spendy, but we fold it into the bid. Very similar to folding in a standard credit card processing fee into the bid. It is up to you if you want to fold in this charge or not...we do..

The whole process is very easy to set up and I am just touching the surface of what is available. Also, the service from GE is top notch. We have had questions from time to time and they have been very helpful.

They have set it up so that us little guys can look and make offers like the big guys. They also have some stats that show how much more people will pay with credit on a job. People are much more willing to upgrade based on credit than if they are paying cash. Just a fact of life....

dale

orson · 05-07-2008, 07:34 PM

Dale,

Thanks for the link. I have also been thinking about offering my customers financing help/options. Are GE's interest rates for the customer decent?

rbsremodeling · 05-07-2008, 07:37 PM

Quote:

Originally Posted by orson

Dale,

Thanks for the link. I have also been thinking about offering my customers financing help/options. Are GE's interest rates for the customer decent?

If their credit is good yes.

**Ed the Roofer** · 05-07-2008, 09:58 PM

What criteria do they look at to approve a Contractor to offer their financing agreements?

I really would like to offer this option.

Ed

boman47k · 05-20-2008, 10:00 AM

Quote:

Originally Posted by Ed the Roofer

What criteria do they look at to approve a Contractor to offer their financing agreements?

I really would like to offer this option.

Ed

Ditto..

rbsremodeling · 05-20-2008, 10:17 AM

Gross dollar revenues. They use to ask for over a mill a year gross but I suspect that has been relaxed.

GE Money was a 3-4 page application, tax returns and a copy of your contract. I think that was it

PS ED I think is PM'ed you the info before

HallamContract · 05-21-2008, 09:09 AM

Just wanted to let everyone know we got approved through a national company to offer 0 percent financing from 3 to 36 months. The rates are better than GE in my opinion. If you shop around, there are some companies out there that offer really good rates. We have had three customers request applications already.

**Ed the Roofer** · 05-21-2008, 10:07 AM

Hallam,

Would you mind sharing a link to that National company here or in PM's to those interested?

RBS,

I didn't follow through with the GE at that time because of the limits they needed to be approved.

Ed

vinylguy · 05-21-2008, 12:39 PM

wells fargo, american general, 1st mutual, great bear, G E,
i could go on and on
yes we use them all and all of them have thier own little twist to help you make the sale.
research then research then get invovled with it and you will double your sales at least if you don't already offer financing!

HallamContract · 05-21-2008, 01:13 PM

Sorry.....I meant to include that in my past post. We are working through Wells Fargo. We can do a 6 month, no payment option for 3 percent, a 6 month payment plan for 2 percent and a 12 month payment plan for 4 percent.
American General had even better rates, but they would not take us on because we do not operate out of a store front.

**Ed the Roofer** · 05-21-2008, 01:18 PM

Thank you all for the other options.

Ed

HallamContract · 05-21-2008, 01:46 PM

Vinylguy,

You use them all simultaneously? How does that work?

boman47k · 05-21-2008, 06:26 PM

I assume you have a good track record of sales? Seems this would be hard to get set up for a new company with little to no sales record.

72chevy4x4 · 05-21-2008, 07:13 PM

I'm trying to search Wells Fargo for info on the customer financing, but not having any luck. Do you have an address?

vinylguy · 05-21-2008, 07:16 PM

hallum,
its because we charge so much for each job just one company can't finance it alone
L O L !

boman47k · 05-21-2008, 09:19 PM

Anyone tied into a regular finance company and getting jobs financed for the customer? About 25 to 30 years ago, it seems I was told by one manager I could sell loans to buying customers (furniture) and get a fee for it. If that can be done, it might be better than having to pay a fee. At least until one could go the card route.

HallamContract · 05-22-2008, 07:43 AM

They did ask for a P&L. Our company has been doing well despite the slow market. Also, things are not as slow in Pittsburgh as they are in other parts o the country.

The forum won't let me post the site because I don't have enough posts yet. Google Wells Fargo retail financing and it will be the first link that pops up.