Home Improvement Contractor License Requirements by State [Guide]

Posted on April 1, 2022

Looking to obtain a new license for your home improvements business? Here is a state-by-state listing of the general requirements to complete to become legal in your state.

Generally, contractors will need to fill out an application and submit or mail those documents with an application fee to state or county officials, depending on their location. Once approved, you'll have a lot more freedom to take on work.

Alabama

Home improvement contractors in Alabama need to show proof of a license based on the project they are undertaking.  Industrial and commercial jobs estimated to cost at least $50,000, or residential jobs estimated to cost $10,000 or more require a license.

Swimming Pools

With swimming pools, anything over an estimated $5,000 requires a license.

The Alabama Licensing Board for General contractors has reciprocity with Mississippi, Tennessee, Arkansas, and Louisiana.

Alaska

In Alaska, home improvement contractors need to successfully pass the Alaska Craftsman Home Program or show proof of having completed post-secondary Arctic engineering. Alaska requires a separate license for home and commercial contracting work. There’s also a lesser certification called the Residential Contractor Endorsement, which requires a 16-hour long cold climate course. 

Handyman contractors may perform work on projects with an aggregate contract of $10,000 or less for each project. This aggregate total is to include all labor, materials and other items for that site or project

Contractors working with dangerous paint, boilers, and explosives, among others, need to show a business Certificate of Fitness for the Trades.

Arizona

Similar to Alaska, Arizona requires that a home improvements contractor have two separate licenses to undertake commercial and residential projects. 

Any business which contracts or offers to contract to build, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, development or improvement, or to do any part of the work, must be a licensed contractor.

Also included in work requiring a license is the erection of scaffolding, connections to utility service lines, metering devices and sewer lines, mechanical or structural service to a structure or improvement, and any other work in connection with the project.

The term "home improvement contractors" includes subcontractors, floor covering contractors, hardscape contractors, and consultants representing themselves as having the ability to supervise or manage a construction project for the benefit of the property owner.

Generally, if labor and materials exceed $1,000 OR a permit is required (regardless of the price of labor and materials), then a license is required. Please read the Arizona Revised Statutes on "Persons not required to be licensed; penalties; applicability" ARS §32-1121.

Contractors must be properly licensed before submitting bids.

Work-related to electrical, plumbing, air conditioning systems, boilers, swimming pools, spas, and water wells must be subcontracted to an appropriately licensed contractor. 

Alternatively, for projects that cost more than $750, professionals must have a license. 

Arkansas

In Arkansas, if the job costs less than $2,000, then a license is not needed. However, for projects equalling or exceeding that amount, it is legally mandated that the contractor be licensed. If the general license is not in possession of one, then the responsibility falls on the subcontractor to get the necessary qualifications. See the generally applicable statutes governing residential contracting licensing here. 

California

For the most part, for projects that cost more than $500 in California, the contractor must have a license - in most cases as a residential remodeling contractor. In these cases, you will be required to take a licensing examination. To be safe, it is best to confer with the legal authorities to determine the procedure that you should adopt. 

Colorado

Unlike most states, Colorado’s contractors’ licenses are administered at the local level, rather than the state level. Contractors must obtain a business license, one which is different from a contractor’s license. 

Connecticut

In Connecticut, there's a home improvement contractor registration requirement if: 

• You perform work on residential property (single or multi-family dwellings of six units or less), condominiums, or common interest communities; and

• You charge more than $1,000 for home improvement contracts during any 12 consecutive months.

You do not need to be registered as a Home Improvement Contractor if:

• You work only as a subcontractor for a registered Home Improvement Contractor;
• You only build new houses;
• You only do commercial work; or
• You hold a trade license issued by the state, and the work you are doing is within the scope of that license. Requirements for New Home Construction Registrations

A home improvement contractor who does new homes must obtain a New Home Construction Contractor registration from the Department of Consumer Protection. This is a separate registration from a Home Improvement Contractor. If you get both registrations, you will not have to pay the registration fee for the New Home Construction Contractor registration, but you will have to pay into the New Home Construction Guaranty Fund.

For more information, download the Connecticut Home Improvement and New Home Construction Handbook for Contractors.

Delaware

Delaware law defines contractors as “every person engaged in the business of Furnishing labor or both labor and materials in connection with all or any part of construction, alteration, repairing, dismantling or demolition of buildings, structures, driveways, roads, bridges, viaducts, sewers, water and gas mains and every other type of structure as an improvement, alteration or development of real property.”

Delaware’s a small state and has several license requirements for those who live outside of the state. Out-of-state contractors also need to post a surety bond.

Florida 

In Florida, contractors may choose between registered and certified licenses to work in compliance with State Law. Registered professionals are eligible to work on a local scale while certified contractors can work on projects anywhere in the state. Applicants must pass the Florida Contractor License exam or obtain a Certificate of Competency from their local government licensing authority.

Contractors’ license applicants must show proof of four years’ work experience demonstrating experience in the field corresponding to the license applied for. Translation: if you're applying for a license as a painting contractor, you need to show four years of experience as a painter or painting supervisor. The same goes for fences, landscaping contractors, and so on.

For certified contractors, this work experience should include a minimum of 1 year of supervisory experience. Some licenses require further evidence of specific experience. These include the Florida General Contractor License and the Residential Contractor License.

Georgia

Unlike other states, contractors need to comply with a series of highly specific requirements to work legally in Georgia. A license is required for work on any single-family or two-family homes or townhomes that cost more than $2,500. In addition, professionals must pass a business and law assessment to be granted certification. Click here for full details. 

Hawaii

The Hawaii Department of Commerce and Consumer Affairs Professional and Vocational Licensing Division, like most states, requires that contractors have a license for projects which exceed a cost threshold. In Hawaii, this threshold is $1,000. Similarly, contractors need licenses for specific home remodeling jobs that require permits.

Hawaii has different requirements for contractor entities vs. sole owners and responsible managing employees. Click here for details. 

Idaho

54-5203, Idaho Code defines a contractor as: "Any person who in any capacity undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid to, or does himself or by or through others, perform construction." or "A construction manager who performs construction management services."

All contractors who do work exceeding a $2,000 value must register with the State of Idaho, with a few exceptions listed here. 

Illinois

Illinois contractor licensing is generally handled at the local level. As long as you do not work in plumbing and roofing, you do not need to have a state-level license to work in Illinois. 

Indiana

Like Illinois, Indiana handles contractors’ licenses at the local level. Only plumbers need to be licensed by the state of Indiana. Please confer with the Department of Business and Neighborhood Services for more information. 

Iowa

Iowa law requires all individual contractors and businesses performing "Construction" work within Iowa to register with the Iowa Division of Labor and renew annually if earning at least $2,000.00 a year from construction. More information can be found by reviewing the Iowa Code and Administrative Rules.

Kansas

Kansas is another state that issues contractors' licenses at the local level, rather than at the state level. Water well drillers along with asbestos abatement contractors are the only professionals who must obtain a state license. Please check with local authorities to determine what certification is needed based on your trade. 

Kentucky

The only home improvement professionals in Kentucky that are licensed at the state level are electrical, HVAC, and plumbing contractors. That said, there is a mutual reciprocity license agreement between Kentucky, Ohio, Louisiana, Virginia, and West Virginia. 

Louisiana 

Similar to other states, Louisiana has license requirements geared specifically for building contractors. For projects that exceed $7,500, professionals need a regular license. If costs surpass $75,000, contractors need a residential license.

Applicants must also submit financial statements demonstrating a net worth of at least $10,000, take a course in business law, and pass an exam. 

Maine

Maine does not license home/residential contractors at the state level. The only professionals within the home improvement industry licensed at the state level in Maine are plumbers, asbestos abatement professionals, and electrical contractors. 

Maryland

In Maryland, contractors license applicants must: 

• Provide proof of at least two years of experience in home improvement work, construction, and/or related education.
• provide proof of financial solvency based on the scope and size of their business in relation to total assets, liabilities, a full credit report, and net worth. Any applicant who does not meet the financial solvency guidelines may purchase a surety bond or obtain an indemnitor.
• Provide proof of current $50,000 liability insurance.

Massachusetts

Unlike most other States mentioned, Massachusetts demands that general contractors obtain a Construction Supervisor License via the Office of Public Safety and Inspections. However, additional stipulations are required for plumbing, electrical work, and other trades. 

Michigan

In Michigan, all home improvement professionals need to hold a license. These contractors include those who work on residential buildings and structures, electrical projects, and maintenance and alteration. The Licensing and Regulatory Affairs of Michigan is the entity that is in charge of issuing licenses. You can find a step-by-step tutorial on obtaining a contractors’ license in Michigan here. 

Minnesota

Individuals and businesses that contract directly with homeowners to build or improve residential real estate (a building constructed for habitation by one to four families and detached garages) by offering work in more than one skill area are required to have a residential building contractor or remodeler license. 

License applicants must designate one individual to serve as a "qualifying person" (QP) regardless of whether the licensee is an individual proprietorship, partnership, LLC, or corporation. 

The QP must take the required exam and fulfill the continuing education requirements for the licensee. Read more about who needs a license.

Any contractors operating in Minnesota that declare more than $15,000 are required to have a Contractors and Remodelers’ License. These contractors include remodelers, roofers, and rebuilders. There are two separate boards that handle licensing: The Board of Electricity is the entity that licenses electricians while The Plumbing Board of Minnesota is in charge of licensing plumbers in Minnesota. 

Mississippi 

Mississippi as a State is one of the most demanding when it comes to licenses for home improvement. Irrespective of the type of project within the home remodeling industry that you are undertaking, all require a license except for small projects. 

You can find a detailed video on how to obtain a Mississippi contractor's license here. 

Missouri

In Missouri, licensing is not done at the state level. Instead, it is up to a given municipality to determine the license that should be given to a professional to operate on a given project. What’s more, if a contractor wishes to work in multiple municipalities, they should get a license for each region in which they’d like to work. 

Montana

In Montana, all construction professionals must sign up at the state level via the Department of Labor and Industry. If you have employees, you must apply for a construction contractors’ license. If not, you must get an independent contractors’ license. 

Nebraska

The Nebraska Contractor Registration Act requires contractors and subcontractors doing business in Nebraska to register with the Nebraska Department of Labor. 

All contractors with one or more employees must provide a current Workers’ Compensation Certificate of Insurance (ACORD 25) with the Department of Labor listed as the certificate holder. Each contractor is responsible for making sure an updated insurance certificate is on file with the Department of Labor. Any contractor whose records indicate their coverage has expired will be removed from the list of registered contractors until an updated certificate is received from the contractor’s insurance agency.

Nevada

In Nevada, it is imperative that you have a license to operate. The only exception applies to some jobs that cost less than $1,000.

The license costs $300 to obtain. You can pay with a money order. You can download the full application here. 

New Hampshire

In New Hampshire, contractors' licenses are handled at the local level.  Only electrical, plumbing, asbestos, and lead abatement contractors can be granted state-level licenses. Within the electrical home improvement arena, any project work related to circuits designed for heat, light, and power requires that you have contractor licensing. Any type of electrical work does not need a license for you to operate. 

New Jersey

New Jersey requires a home repair contractor to have a license to execute financed home repair contracts on the goods or services provided to New Jersey consumers for home repair work.

A home repair contractor who deals strictly in cash installment payments over 90 days or less or accepts credit card payments does not need to obtain this license.

NOTE: All home repair contractors, regardless of payment method, must also contact NJ Division of Consumer Affairs concerning required registration. You can obtain information by calling 973-504-6370 or at  www.njconsumeraffairs.gov/hic/.   

A home repair salesperson license is required if a salesperson secures a financed home repair contract from a New Jersey homeowner on behalf of a licensed home repair contractor.  A home repair salesperson may be affiliated with only one licensed home repair contractor at one time.

The governing statute is the New Jersey Home Repair Financing Act, N.J.S.A.17:16C‑62 et. seq. 

New Mexico

Based on state law, New Mexico requires any contractor to secure a license from the board before they start operating. Download the complete rules, laws, and regulations governing New Mexico contractors licensing.

New York

New York handles home improvement contractor licensing at the local/municipal level, not at the state level. Check with your local government for licensing information specific to your area.

Here is a home improvement license application checklist specific to New York City. 

North Carolina

A general contractor’s license needs to be presented in North Carolina by the individual contractor for projects which cost more than $30,000. To obtain a license you must complete the Application for License to Practice General Contracting in the State of North Carolina which is available on the Board’s website at www.nclbgc.org. 

Similarly, professionals who perform electricity, plumbing, HVAC, and fire sprinkling services also need a license.

Download a complete guide to the rules and regulations concerning contracting licenses in the State of North Carolina.

North Dakota

North Dakota requires contractors to be bonded and insured to do business within the state and to hold a license for any project worth more than $4,000.

Applicants can choose between a Class A, B, C, or D license, with the Class D license allowing them to do jobs worth up to $100,000 each. 

Ohio

Ohio issues several licenses at the state level, including refrigeration, HVAC, plumbing, and electrical. For any other projects, licenses are at the local level. 

Oklahoma

Oklahoma issues residential contractor licenses at the local level, not the state level. Check with your city or county officials about the specific requirements in your area. 

Oregon

In the state of Oregon, everyone who works in the construction industry needs a license, with just a few exceptions. Contractors must carry surety bonds, liability insurance, and workers' compensation insurance. Application forms are available here. 

Pennsylvania 

The Commonwealth of Pennsylvania currently has no licensure or certification requirements for most construction contractors (or their employees). However, most home improvement contractors must register with the Attorney General's Office. 

Rhode Island

Rhode Island contractors must register with the Contractors Registration and Licensing Board for any project related to home construction, commercial construction, remodeling, home repair, and alteration. There’s a separate requirement for commercial roofing contractors. 

South Carolina 

The State of South Carolina licenses both mechanical and general contractors to undertake projects within the commercial, industrial, and residential space. That said, those contractors who work exclusively in residential projects can go through the Residential Builders Commission where they will be required to sit for an exam. 

South Dakota

South Dakota does not issue contractors’ licenses at the state level. All general contractors licenses are handled at the local level. Check with your city and county officials about contractors’ license requirements in your area. 

Tennessee

Tennessee has thresholds for HIC bidding projects that indicate the freedom that contractors have without needing to have a license. A contractor’s license is mandatory for all projects that exceed $25,000 in costs. What’s more, any projects that include plumbing, electrical work, and HVAC, need to be done by a licensed professional irrespective of the project cost. 

Texas

Special contractors, namely HVAC, electrical, plumbing, and pump installation specialists need a license in Texas. In such cases, the state issues the license.

Utah

Utah requires all All professional contractors to have a license. There are two tiers: Specialty contractors and general contractors. 

Specialty contractors license applicants must have completed a pre-license course from Associated Builders and Contractors Inc (ABC), Utah Home Builders Association (UHBA), or Associated General Contractors of Utah (AGC). Specialty contractors require a 25-hour pre-licensure course. All general contractors (E100, R100, B100), plumbing and electrical contractors require a 30-hour pre-licensure course (unless you took the pre-licensure course BEFORE October 1, 2019, in which case you do not need the extra 5 hours).

General contractors must meet all the above requirements, PLUS meet the state’s experience requirement:

• Two (2) years of experience in the construction industry. This experience must be at least 4,000 hours (or 2 years) of paid work experience at any time in your life in the construction industry. You must self-certify that you have this experience. 

The other ways to satisfy the experience requirement (pick one):

• Qualifier on current or previous Utah Contractor License for at least 2 years;
• Construction Management Degree (2 or 4 year Degree);
• Licensed Utah Professional Engineer;
• Passed NASCLA Examination for Commercial General Building Contractors, or;
• One (1) year of licensed experience working in another State, District or Territory of the U.S. in the similar scope of practice sought in Utah if the license is currently active and in good standing.

Vermont

In Vermont, general contractors do not need to be licensed by the state. However, plumbing, electrical, and HVAC experts need to bear credentials sealed by the state. 

Virginia

The Virginia Board for Contractors regulates individual tradesmen who engage in the trades of electrical; plumbing; heating, ventilation, and air conditioning (HVAC); gas fitting; water well construction; elevator mechanics; backflow prevention; and building energy analysis. (Although the term "certified" is used, state certification of these trades is mandatory, not optional.) Individual tradesmen may also be subject to local ordinances, laws, or other requirements imposed by other state agencies, courts, or certain localities. Questions about local ordinances, etc. should be directed to the community in which the individuals plan to engage in their trade.

Washington

Washington State mandates that both special and general pros need to register with the Washington State Department of Labor and Industries.

Washington DC

In Washington DC, both general contractors, as well as construction managers, need to get a license through the Department of Consumer and Regulatory Affairs.

West Virginia

West Virginia only requires that the contractor have a license if the project they’re working on costs more than $2,500. 

Wisconsin

According to the Wisconsin Builder Association, Wisconsin Department of Safety and Professional Services issues contractor license. To pull permits to do work on one- or two-family homes, Wisconsin requires you have the dwelling contractor certification business certificate, and that at least one person from the company has a dwelling contractor certification. 

If you are not doing work on one- or two-family homes, or you are doing work that does not require you to pull building permits, there’s no state-level licensing requirement. But you must still meet any local/municipal level requirements. 

Wyoming

The only professionals within the home industry in Wyoming that require a state-issued license are electricians. For additional information, find out what licensing and certifications are required for your specific profession at the local level as well as the respective license application fee. 

In each case, you can find additional resources regarding home improvement licenses at the page linked. Incomplete applications are typically held in suspense or rejected. Landscaping businesses may have different requirements than general home improvement firms.

How to Offer Installment Loans for Bad Credit Score

Posted on April 1, 2022

Businesses that sell more "luxurious" or pricier products or services should always have several payment options for their customers. Accepting exclusively one-time payments in home improvement, HVAC, or healthcare can lead to severe revenue losses. Why? Because many customers can afford your service, but not if they have to cash out all at once.

Just 39% of U.S. Citizens can afford an unexpected $1,000 expense. Meaning, by accepting only one-time payments, you lose more than half of potential customers. That's why more and more intelligent businesses offer installment loans as part of their financing options.

Depending on the customer's credit score and credit history, buyers can get different loan amounts. As a business, you can provide installment loans by yourself or by partnering with a lender or lending partner.

Since many small businesses don't have the proper experience to handle a loan request’s legalities, give installment loans, and manage late payments, companies often go with the latter option.

But that doesn't mean you shouldn't know how the whole credit score and credit reports business works. To help you get smarter, here's an educative introduction to offering installment loans to customers with a bad credit score.

What is an Installment Loan?

You might not be familiar with the term "installment loan,” but you probably encountered one. An installment loan is a cash loan where the client borrows a fixed loan amount at once. The borrower repays the loan amount over a fixed amount of monthly payments (installments). Although an installment loan usually has fixed monthly payments, the monthly installments can differ if the installment loan comes with variable interest rates.

An installment loan can either be an unsecured or a secured loan. A secured loan requires collateral, while unsecured loans don't.

That's the general definition of an installment loan, but repayment terms can vary. Clients always look for a fixed-rate loan with affordable monthly payments and a low origination fee. Just because someone needs an installment loan, they don't want to go through debt consolidation, especially if their credit score isn't too great.

To get an installment loan and borrow money, banks usually look individual's credit score first. Based on the credit report from credit bureaus, the bank decides on the loan amount, down payment, interest rates, etc. If a client has poor credit, the bank can deny loan approval.

3rd party lenders (such as a credit union) have more flexible criteria and a quicker loan process, especially for clients with bad credit scores and poor credit history. The main reason is that 3rd-party lenders are private companies and have more law leeway. Although clients can't open a bank account with nonbanks, they can get different loan types such as auto loans, student loans, etc.

For example, if an individual needs to pay unexpected medical bills, 3rd party lenders are a quick way to get loans. That's why it's no surprise that nonbank lenders issued 68.1% of total mortgage loans in 2021 alone.

Is a Personal Loan an Installment Loan?

People mistake a personal loan and an installment loan as different. In reality, an installment loan falls under the more general personal loan category.

A personal loan is any granted loan that an individual gets for covering expenses for different reasons. An auto loan or a student loan can be a personal loan.

But not every personal loan has to necessarily have fixed monthly installments as part of its loan agreement.

Another example is payday loans. Clients usually have to repay payday loans by their next payday. Although some payday loans can be installment loans (with interest rates), installment loans are a  broader term. Most importantly, payday loans often don't require checking the credit history.

In conclusion, a personal loan is the most general term of the three. An installment loan is a subcategory of personal loans, and a payday loan is a further specification.

The three most common types of installments loans are car loans, mortgages, and consumer loans.

Car Loans

Auto installment loans can range from 12 to 96 months. Meaning, the client needs to repay their installment loan across 12 to 96 monthly payments.

Longer terms usually mean lower monthly payments but also higher interest rates. Meaning, if a client takes an installment loan over 96 months compared to 12 months, they will pay less each month, but the overall cost will be higher due to higher rates.

Mortgage

A mortgage is an installment loan used to buy a house. Due to a high loan amount, mortgages can last anywhere between 15 to 30 years. Similar to car loans, mortgages usually have fixed monthly payments, and the longer the payoff period, the bigger the rates.

Since mortgages last for decades, they play a vital role in a client's debt to income ratio, further impacting the chances of getting another installment loan. If the client is late with their payments, lenders can hesitate to approve a new loan offer.

Consumer Loans

A business offers consumer loans to customers interested in buying a "high-end" item or service. Although it can be a luxury, it can also be essential such as medical bills.

Depending on your industry, the reason for consumer installment loans can range from cosmetic surgery services to roof financing.

Generally, any business can offer consumer loans to make the purchase easier for the customer. But before we explain that, first, we need to understand how a credit score affects installment loans.

Poor Credit Score & Installment Loans

Depending on where a client gets a personal installment loan (traditional bank, credit union, nonbank lenders), they need to fulfill criteria set by the financial institution's loan term.

The credit score tells the lender how likely the client will stick to the repayment schedule and repay the loan amount in time. The official FICO credit score goes from poor to exceptional:

• Poor (less than 580) - Consumers with poor scores have the slightest chance of getting monthly installment loans. Especially if they have debt and their debt-to-income ratio is high.
• Fair (580 to 669) - Although still below average, consumers with a fair score can get personal installment loans with high-interest rates and other unfavorable terms.
• Good (670 to 739) - Individuals with a good credit score are at or above average and can usually get an installment loan with competitive interest rates.
• Very Good (740 to 799) - Clients with a very good credit score are low-risk clients who can get many different personal loans with high loan amounts and fixed payments.
• Exceptional (800 to 850) - Clients with an exceptional credit score have access to the most favorable, fixed interest rates and can get the best installment loans.

How the Credit Score Affects the Loan

Credit ratings affect the possibility of an installment loan and the general loan term elements such as required monthly payment, loan amount, interest rate, etc.

Depending on your credit score, the interest rates can differ as much as a whole percentage. Meaning, clients with bad credit scores might pay 4% interest instead of 3%. This might not seem much at first, but it gets more significant with long-term loans.

Let's say a client is browsing long-term installment loans for home improvement. Since home improvement requires more significant loan amounts, the difference can quickly hit 5-figure amounts over a more extended period.

How to Offer Installment Loans for Bad Credit?

If you're running a small business, there are two ways to offer installment loans through consumer financing: primary or via a 3rd-party lender.

• Primary Financing - The business acts as a lender. Meaning, the company offers the service but also involves financing the customer. This means the business owner is the one who checks the client's credit history, approves loans, provides the agreed loan amount, and keeps a watchful eye over personal loans issued previously.
• 3rd-Party Lender - If a business owners partners with a 3rd-party lender, the lender takes over the risk of providing installment loans. Meaning, the lender provides the money and manages the entire installment loan process.

What makes 3rd-party lenders so attractive is that they offer a solution both for the business owner and clients. It's in the business owner's interest to provide flexible financing solutions. Not only are 3rd-party installment loans more relaxed, but they are more accessible as well.

Clients can borrow money by applying for an installment loan online. Furthermore, clients looking to get online installment loans usually don't need a bank account. Finally, although it's better if a client doesn't have bad credit, the chances are higher with a 3rd-party lender than the traditional bank.

The most significant advantage for the business owner is that you get the pre-determined loan amount the moment the 3rd-party lender checks and approves an online installment loan application.

If the client has a bad credit usage history, it affects the client, not the business owner.

For the client, they can compare loan rates and have more flexibility with the initial down payment. Often, the client needs to pay a one-time origination fee. But the client can enjoy the benefits of multiple installments loans without paying any additional origination fee later on.

Benefits of Offering Installment Loans

Because of how installment loans work (fixed monthly payment options), it's easy to see how your business can benefit. Such loans offer more financial flexibility, increase the buying power, and by partnering with the right online lenders, customers can file a loan request online.

Besides getting the loan early, down payment, origination fee, rates are lower and more attractive for your customer, especially those with a weaker credit score.

But offering installment loans has other, more subtle benefits as well.

Increase Sales

Offering personal loans (including installment loans) means you can reach out to more customers. Banks need to stick to rules, but in reality, customers with bad credit scores can often afford an installment loan.

As long as you partner with a lender who can do in-debt research, offering installment loans as part of your consumer financing strategy is a sure way to increase sales and revenue.

Competitive Advantage

In a highly competitive market, every little advantage counts, and financial flexibility is more than a minor advantage.

If you can afford your customers different loan options, even more, if they can register for installment loans online, not only are you standing above the rest, but you're ensuring that future customers hear about you too. This brings us to the third advantage.

Customer Loyalty & Reference

Knowing that a family could fix their roof or pay medical bills thanks to you doesn't go unnoticed. If you provide customers with what they want and make it convenient, you can be sure of two things. First, they will come back. Second, they will talk about you to their friends.

The only thing you need to ensure is that you partner with the right lender: a lender who has your interest and the interest of your customers in mind.

Online lenders can sound too good to be true. Although they provide installment loans to customers with bad credit scores, keep in mind that a credit score below 670 has genuine risks.

Some online lenders will approve an installment loan no matter the score. Although that won't impact your revenue directly, it can create a bad reputation if the customer ends up fighting the loan provider.

Remember always to do your research when looking for consumer financing providers.

Finding the Right 3rd Party Loan Provider

It doesn't take much to find consumer financing companies. What can take time is finding a consumer financing lender that's right for your business.

Your customers differ, meaning that it's a bad idea to have the same approach for every customer interested in a loan for your product or service.

Time Investment Company prides itself on a tailored and family-oriented approach. We know that if we want to succeed, businesses we partner with need to be happy. And the only way for a business to strive is to provide top service to its customers.

If you're looking to improve your financing strategy, feel free to contact us, and we will help you take the step in the right direction.

7 Roofing Sales Tips for Contractors to Increase Close Rates

Posted on April 1, 2022

You’ve done the marketing. You’ve made the investment in developing the lead, and your sales team has worked hard to get the appointment and present your solution. Now you’ve got to close the sale. Improving your close ratio, which is the number of kept appointments divided by the number of signed and paid contracts,is a critical component of growing your business. If you’re successful, improving your close ratio also offers the most immediate and direct improvement on ROI you can make as a roofing contractor.

Assuming your product is decent and fairly priced, improving your closing ratio is usually a matter of roofing sales training and helping your sales reps improve their roofing sales pitch technique. Investing in one of the many great sales training programs out there is a great idea to help you close sales and bring in more customers.

Mastering roofing sales techniques can take years for roofing contractors - whether you are selling a small patch or repair or trying to close on a whole new roof.

But you can start with these seven roofing sales tips:  

1. Qualify the customer before the appointment. 

Ask, “Who needs to approve the work?” Ask if all parties necessary to the approval will be present. If all parties can’t be present, try to find a time where everyone involved in the approval can be present.

This is common with couples doing work on private residents: You or your sales rep shows up, does a great presentation on a job that’s necessary, fairly priced, and within the prospect’s budget - and then instead of walking away with the order, you get “I need to talk it over with my husband” or “I need to check with my wife.”

These are called “one-legged appointments. And while sometimes they’re avoidable, you should do as much as you can in advance to avoid them. Make sure the people at the meeting have the authority to make the decision. 

Qualifying your leads is especially important if your sales rep has to travel out of his or her local area. Make sure that the person they're meeting with is the homeowner or someone authorized to make roofing and other business-related decisions. regarding the property.

2. Act on roofing services leads quickly. 

When you get a roofing lead on one of your marketing channels, or through organic traffic on your website, you must get back to the property owners as quickly as you can - even if it’s only an auto-generated response that one of you will contact the client within the business day. Even then, make sure your call is early in the day, rather than later.

If they triggered your inbound marketing system, chances are good they triggered someone else’s too, in the process of researching their upcoming roofing project. The first sales team to respond, and to get them on the phone to make the appointment, has the advantage.

In today’s competitive environment, that means you should have an autoresponse system set up to capture and respond to sales leads, and route them automatically to your office to forward to your reps in the field.

Responding quickly and efficiently to leads is a matter of technology, organization, and initiative.

Also, don’t buy leads if you don’t have a system and process in place to work them - at least at the company level. 

3. Dress like a roofing business professional. 

Roofing isn’t a suit-and-tie business. But it is a professional business, and you and your reps are out there asking affluent and wealthy homeowners and commercial landlords to write you five- and six-figure checks. Your salespeople interacting with them must dress appropriately. That means a clean, snappy, ironed polo shirt or golf shirt or dress shirt with your logo, slacks or clean, presentable denim, and a nice case or folder for documents and contracts. 

Professional image is important. Don’t tolerate your field reps selling to your prospects and clients looking like day laborers, and don’t you do it either. Make a good first impression, and keep it up every time you meet with clients or potential clients. Dress with respect for every human interaction.

This doesn’t mean you don’t get your hands dirty on the job. Sometimes you will - especially with smaller companies. That’s fine. But when it’s time to do your initial estimate and sales presentation, and when it’s time to pick up the check and get referrals, dress professionally. 

4. Introduce financing early. 

Make sure the customer knows right away that you have an easy way to finance whatever work they get done. Offer payment options. With roofing, the customer is usually already nervous about what it’s going to cost them. Put their mind at ease by saying, “I want you to know from the outset that we have payment plans and financing options to make anything you decide to do very affordable."

The idea is to set the client’s mind at ease about having to pay a lot of cash upfront to get the work done. Otherwise, they may be on guard, and subconsciously trying to look for ways to get the job done cheaply, rather than financing a little bit more, and doing the job right. You want them relaxed and thinking about what’s possible, not worrying about what’s affordable. 

Then when you present the price to them, you can give them a choice: Option A is the cash price; Option B - assuming they qualify - is a series of payments. 

TIP: Estimate the payments a little high. Then say ‘let’s see if you qualify for our roofing financing program’ and have them fill out the app. When the payment comes out lower than you estimated, “because of their great credit,” they’ll be happy to buy, and you’ll look like a hero. 

5. Build value before you talk price. 

Before you can talk pricing, you have to build the perception of value in what you have to offer. You need the customer to understand that roofing isn’t a commodity - there are real differences between you and competitors out there in terms of the quality of materials and workmanship. 

Mentioning price too early in the process, before you’ve taken the time to build value in your product, risks causing sticker shock. Even if you’re correct,  potential customers will put you off, jeopardizing the sale. Then someone else will come in, the prospect will say, “the last guy who gave me an estimate tried to charge me $20,000 for this job! Can you believe that?”

Then your competitor guy will laugh with your prospect – even though he knows your price is right, find a few corners to cut, charge $18,500, and walk away with the order. 

All because you didn’t build value in your presentation.

If you do it right and walk your prospect through the logic of each step in your estimate process, the price should not come as a surprise at all. It should be expected. Or even a little lower than they feared. 

6. Differentiate yourself from fly-by-nights, uninsured, unlicensed contractors. 

As a contractor, you understand that there’s a huge difference between the people who do it right, and the cheaters: Unlicensed, uninsured contractors, storm-chasers, people who use illegal labor, and people who don’t carry workers compensation insurance. But your prospect might not realize that. 

So educate them. Ice out the cheaters before the game begins! Show your customers that unlicensed, unbonded, and uninsured contractors put your customers at risk. Show them how to look up license numbers and inspect the disciplinary and complaint record for your own company and those of any competitors.

Show them how to ask for a certificate of insurance for any other contractors they might hire. This protects them, the workers, and their neighbors.

That way, when someone comes in after you and bids the same work at a ridiculously lower price, many times the customer will go with you. “It was just like you said it would be,” they’ll tell you. “The price was low, so we looked into it and found they weren’t even licensed.  

7. Offer an affordable financing solution from a consumer lending company that understands your business. 

Usually, the customer’s bank or credit union isn’t the best choice. Their applications and decisions take too long, require too much information, and too often do not adequately serve people with some dings on their credit. Rejection rates are too high.

Credit cards can be convenient, but their limits are often too low to meaningfully finance roofing projects. And interest rates are usually too high.

Roofing sales tips can only get you so far. If your customers can't afford the repair or the cost of an entire roof, you won't necessarily get more sales. Instead, it’s usually better to work with a third-party consumer finance company that specializes in companies like yours. You can partner with consumer financing companies like Time Investment to help your customers afford your roofing services.  

To get started, fill out this quick information form. One of our credit professionals will contact you shortly to work out some financing solutions that suit both you and your customers.

What is a Non-Bank Lender?

Posted on April 1, 2022

Nonbank lenders (including non-bank mortgage lenders) are financial institutions that aren't banks or credit unions. 

Some well-known examples of non-bank lenders include Quicken Loans, Freedom Mortgage Company, Brookings Institution, Green Sky, and Time Investment Company (full disclosure: That’s us!). 

Banks and credit unions are the primary sources of what we call “traditional financing.” They tend to have lots of capital, thanks to all their customers with checking and savings accounts. But outside of conforming mortgages, which they can quickly sell upstream to Fannie Mae and Freddie Mac, they typically have tight credit standards on personal loans and small business loans, and similar financial products.

Banks and credit unions are subject to strict regulation, and their investors tend to prefer borrowers with high credit scores and proven collateral.  But people with shakier credit or less collateral tend to have a much harder time qualifying for traditional financing.

This is where non-bank lenders and alternative lending platforms have an advantage: They aren’t as strictly regulated. And investors tend to have a greater willingness to do business with people who can’t qualify for traditional bank financing. They often receive funds from private equity firms rather than traditional banks. As a financial institution, they can take on a lot more Alt-A and subprime credit risk. In fact, some investors prefer the riskier borrowers, because they can charge a higher interest rate to compensate themselves for the risk.

Non-bank lenders and other alternative financial institutions are typically more flexible with borrowers and have greater freedom to tailor their offerings to your specific industry and customer type compared to other lenders. They can offer a wider variety of loan products to small businesses and their customers and can be more flexible with loan terms.

They often (but not always) have higher interest rates than traditional bank lenders. But non-bank lenders also frequently have lower interest rates and higher limits than those available through credit cards. 

Benefits of Non-Bank Financing Over Traditional Lenders

Although consumer financing covers a wide range of loans, it boils down to helping a small business with finance and increasing its customers' purchasing power.

Benefits of Offering Customer Financing Through Non-Bank Lenders

Partnering with a good non-bank lender who specializes in your industry can offer these key benefits: 

• Low-Interest Rates. By offering consumer financing via non-bank lenders, customers can usually enjoy better interest rates. Being in private ownership provides such institutions more flexibility and the ability to be more competitive with banks.
• More-Flexible Terms and Credit Criteria Than Traditional Lenders. Around 15% of customers struggle with a bad credit score. While a bad credit score is the most common reason, banks can also reject a user merely because it's not profitable for them (especially for mortgage loans).
• Just like it's easier to get traditional loans than government-backed loans, Nonbanks are more flexible with criteria than banks. While standards differ between nonbanks, the user is more likely to get a loan from non-bank lenders.
• Faster Application Process & Access. Additionally, nonbanks usually have an online portal that lets customers fill out online applications right at the sales desk, making it much faster to apply and get funds.

The difference: The borrower can fill out their online applications and get an instant credit decision right there at the closing table. They won't have to jump through endless hoops with their bank or credit union for weeks. And as the business owner, you can receive your money from the nonbank lender or alternative lenders right away.

Connecting With the Right Non-Bank Lender for You

Even if you already have a good relationship with a bank or credit union, it’s a good idea to have an alternative lending service or an alternative online lending platform in your corner as well. Your non-bank lender can be your ‘ace in the hole,’ helping you get more deals approved – especially for customers with less-than-stellar credit, or who don’t quite meet the traditional lending criteria.

Over the last couple of years, a lot of good customers have taken some dings to their credit scores. They may not be well served by traditional lenders, who will charge higher interest rates on their loans, or deny them outright. They don't have the cash to pay upfront, but they can get much better service on their loans from non-bank lenders. And if your business offers them a way to provide realistic, affordable monthly payments that they can easily handle on their income, you can move into this market and do very well.

If you’re a contractor, distributor, merchant, or vendor, feel free to leave your information on our inquiry form and one of our reps will contact you promptly.

Don’t lose another deal because of financing! 

Home Improvement Lead Generation Tactics

Posted on April 1, 2022

The home improvement industry is big - and getting bigger: In 2020, the home improvement industry was valued at $763 billion, and estimated to surpass $1 trillion by 2027. 

But it’s getting more competitive, too. Owners who did business the old way are retiring, and being increasingly replaced by a younger cohort of digital natives who understand how to use the Internet to market their businesses and generate a steady stream of leads. 

You’ve got to keep up with them and beat them on a regular basis. That’s how to keep your crews busy. 

Of course, you can buy leads from other people. That’s a start. And if you don’t have enough organically-generated leads created within your business itself, you should buy them and get your salespeople on them. 

But relying on purchased leads means you’ll always be perceived as part of the pack. 

The lead you bought isn’t optimized for your brand. In many cases, you’ve bought a lead that’s been sold several times over. And you’re often just one of many companies contacting the lead for the work.

And, of course, purchased leads cost money. If you’re relying on purchased leads, you’ll always have a high customer cost of acquisition. 

But the real progress and the real growth will happen when your business is generating a constant stream of exclusive home improvement leads that are 100 percent your own. 

Optimize your website.

First, ensure your website is optimized to receive incoming traffic and help you capture contact information or generate a phone call or email. 

You need to optimize your site on at least two fronts: Keyword searches, including searches on local terms (e.g., “plumbers near me”), and Google Maps searches. 

Fortunately, setting this up is very simple. Using Google My Business online, you can jumpstart your Google business listing. Be sure to complete every section of your Google My Business profile, without skipping any information, or you won’t get the best possible results. 

Get listed on online directories.

Search for local or industry-specific directories that match your business or industry. Search for the relevant local lists and online directories in your area.  Ensure your contact information is correct and up to date. Try to add photos and images. The more complete you can make the profile, the better. The more complete your information, the more solid you look to customers looking for businesses like yours. 

Use a CRM. 

A CRM, or customer relationship management program, helps you capture incoming leads, and create a system for managing your contact-to-sales pipeline. Once you’ve onboarded a new customer, your CRM helps you stay on top of that existing relationship. CRMs also allow managers to create a system to track and fix complaints or follow up at key intervals to generate upselling and cross-selling opportunities. 

There are many CRM options out there, so choosing the best one for your company’s needs might be challenging. With that in mind, we reviewed the best CRMs for small businesses.

Practice reputation management. 

Customers routinely look at online reviews when they shop for goods and services, and home improvement/repair is no exception. Even great businesses can get an occasional bad review. But great businesses also respond to bad reviews promptly. Have someone monitor Google, Yelp, and other key review sites every day. Respond on the review site itself, and contact the customer directly, if possible.

Readers know that no business is perfect. But when they see that management is responsive and proactive at addressing and fixing problems, that can go a long way to earning their business. 

Additionally, make sure your happy customers leave good reviews on your site. Keep them genuine, of course. But provide an incentive for happy customers to share their experiences. 

Invest in local SEO.

Nearly half of all search traffic on Google now involves a local search term. And local searches have high buyer intent: 80% of local searches convert to leads. So it’s a great idea to focus on your own neighborhood, town, city, county, or state. Even with a limited budget, you can do very well ranking for local search terms ahead of much larger companies who have to dilute their marketing over entire states or regions. 

Invest in retargeting ads.

The term “retargeting” means showing ads to people who landed on your site, but didn’t take action. These people have already shown interest in your product or service. Even if they aren’t ready to buy right away, this is a great set of people to keep your name in front of. They may be ready to buy very soon. A retargeting ad with a good call to action has a much better chance of catching them at the moment they’re ready to act than an ad to a general local audience. 

Leverage direct mail and newsletters.

88% of advertisers agree that a newsletter effectively targets and reaches customers without third-party data. You can deliver your lead magnet to your prospects through value-filled newsletters. 

Newsletters ensure your prospects stay aware of your brand. Newsletters allow you to share promotions, offers, premium services, and project details to attract prospects as a home improvement contractor. This strategy can drive contractor leads down the purchase funnel. 

In addition, newsletters can include special or premium offers, upcoming events, new blog posts, updates or changes in terms of services, etc. 

Invest in email marketing.

While you might regard email as an ancient marketing method, it is ranked as the most effective marketing medium. This is quite surprising as several people might think "email is dead," whereas its popularity is on the rise. 

Despite the rise of social media users, more than 50% of the population in the world has an email account. In 2020, the number of email users rose to about 4 billion. 

Marketing your home improvement business via emails can yield an average return of $38 on every $1 you spend. This is why you need to set up an email ad campaign to boost your sales. 

One of the ways to market your brand via emails is by sending out relevant content to your subscribers. For instance, you can provide guides, tips, DIY tutorials, and other information pertinent to your business. 

Before you can pull off successful email marketing, you need a database of the email addresses of people who are interested in receiving valuable emails from your business. 

An excellent way to achieve this is by providing enticing offers, and in return, you ask them to subscribe to your newsletter. You can also include your newsletter subscription form on your website so that visitors can sign up whenever they visit your page. 

Master inbound marketing.

Where outbound marketing is active, Inbound marketing is passive. It works when you sleep. Inbound marketing is designed to attract people who are out there actively looking for you, the home improvement contractor.

If you have a good inbound marketing program, you’ll get a steady flow of people coming to your website and filling out their contact info, expecting you to contact them.

These are valuable leads because they are already demonstrating a buyers’ intent. They’re already thinking about purchasing the products or services you sell - that’s why they filled out your contact form or sent you an email. 

So how do you build an inbound marketing machine?

• Start with your website.

Look at your website from a customers’ point of view. Is it informative and easy to navigate? Is it too sales-y? Is it believable? Is it readable? Does it load quickly on both desktop and mobile devices? Do you have a defined sales funnel on your website that logically moves viewers from your landing page to filling out their contact information or actually placing the order, without skipping any steps? 

If there are problems on the front end, visitors won’t hang around long enough for your site to help you build a perception of value. 

• Develop a content strategy.

A content strategy leverages great content design and structure to bring and engage visitors and then convert them into leads or even customers.

That could mean creating a blog that focuses on actionable tips and advice for your target market. 

Other possible elements of a content strategy could include: 

• Youtube videos
• Online webinars/seminars
• E-books
• White papers
• Frequently-asked-questions
• Bulletin board and forum posts that link back to your website, and more.

Use your financing program as a differentiator.

There are still lots of home improvement contractors who are over-reliant on the customers’ bank’s willingness to lend to them, or on credit card financing. 

But these are notoriously poor matches for home improvement projects. Banks typically don’t like to work with people with less than perfect credit, while credit cards have notoriously low borrowing limits and high-interest rates.

Instead, you can make it clear from the beginning that for your customers, financing is available, affordable, and you don’t need great credit to qualify. We can help with that part. 

Write blog posts.

Creating SEO blog posts will drive more web traffic to your site and raise your brand's visibility. Besides your site, a blog is an avenue to tell your audience more about your business by providing them with helpful content. It is a means of telling them more about your home improvement company, products, and services. 

Posting valuable blog content will also help to rank your site higher on SERP. Companies that blog usually have 55% more website visits than those that do not. 

Bonus Tip: Segment Your Market. 

Whether you’re setting up your CRM for the first time, creating an email or direct mail marketing campaign, or creating an ad campaign, You need to think a few moves ahead: 
Segment your market and your growing list of leads by message. 

One very basic segmenting system would be having one list for private homeowners and another list for commercial property owners. The messaging and product line may be very different, so you don’t want them getting the same newsletter. 

What Are Third-Party Lenders?

Posted on April 1, 2022

A third-party lender is a company that provides loans to companies or customers by taking on the risk of default.

Third-party lending services come in many forms and functions. In today's market, they are frequently online lenders. While the most well-known lenders focus on home loans and mortgages, many other lenders specialize in niche markets like home improvement or health care. These lenders can also provide lines of credit for businesses with good payment histories who want temporary access to capital but don't want long-term debt.

The third-party lending team can also offer short-term emergency funds for individuals who are not in great financial standing. For example, a customer might be able to get a loan from this type of entity when they have been declined for credit elsewhere.

Why a Third-Party Lender is Different from Banks

Third-party lenders are often more flexible with their underwriting and allow for a wider scope of financial needs. They also can provide lower rates than banks in certain cases.

Banks also tend to require quicker payback, whereas third-party lenders offer more room for debtors to choose lower payments over a longer period of time. 

When it comes to business applicants, businesses, third-party lenders are usually the best options. Some third-party lenders actually specialize in assisting businesses finance goods, equipment, and services. These businesses benefit since these non-traditional, non-bank lenders usually offer more flexible finance options than banks. For the right customer, they can offer great service.

Don't Rely on Bank or Credit Card Financing

The problem with traditional financing companies - banks, credit unions, and credit cards, is that they frequently won't approve customers with a less-than-pristine credit history. Or in the home improvement industry, they may want to hold the customers' homes as collateral.

Credit cards often don't have a high enough credit limit to be realistic customer financing options.

Instead, when you offer customers a payment plan through a good third-party financing company, you can offer realistic and affordable payment plans to customers with a more challenged credit history, and with a variety of credit scores. 

Offering consumer credit solutions and allowing your buyer to pay overtime can help small businesses increase sales and provide a better value for customers while reducing risk to themselves.

If you offer credit to customers on your own, you take on a lot of legal risk and responsibility. Your team has to follow fair credit and collections laws - and you expose your company to significant liability and penalties if your collections staff makes a mistake.

By offloading collections and accounts receivable departments to third-party providers, and customer financing platforms, you get paid upfront, also reducing your legal responsibilities and legal risks, while significantly improving your business's cash flow - a key component of running a successful business.

Meanwhile, when you provide consumer financing through third-party financing companies may help you reduce or eliminate credit card discount rates and transaction fees, and reduce your exposure to chargebacks.

Benefits of Using Third-Party Lending Services

Third-party lenders can typically approve larger loan amounts for those who need it – often dwarfing the amounts available via credit cards or traditional bank or credit union financing. 

In the home improvement business, some third-party lenders will approve loans up to $50,000 to $100,000, or even more. 

Banks and other traditional lending institutions generally do not offer these loan amounts, especially to businesses. This is because they regard businesses as high-risk borrowers 

Third-party lenders are another option available for those who need quick access to cash but don't want the hassle of applying for a loan at a bank.

Here are a few more benefits of partnering with third-party lenders:

• Quick and easy application process: Approval time is usually within 24 hours. With the Time Investment Company, approval is usually within a few minutes for the vast majority of customers.
• Access to funds quickly (we normally release money instantly after the customer confirms the purchase of goods or services).
• Interest rates may be negotiated down for clients with good credit.

No Pre-existing Account Necessary

In addition, most third parties do not require that a borrower already have an account with them before they will approve a loan. With banks and credit unions, this Is a common requirement. Sometimes, the existing account is collateral. But since third-party, non-bank lenders don’t need consumer deposits to function, they don’t require that your customer already have an account with them. 

What is Retail Financing?

Posted on April 1, 2022

Retail financing is when retail businesses facilitate point-of-sale consumer credit or stage payment options to their customers who wish to make a purchase.

Retail financing gives customers options besides paying for the full cost of your product or service up front, putting it on their own credit cards, or lining up outside financing themselves.

Businesses offer it because it makes their offering more affordable. Customers can purchase on the spot, even if they don’t have sufficient credit available on their credit cards. It’s especially useful for impulse purchases – where customers didn’t line up their own financing in advance. 

Retail financing is often done at the point of sale – right at the sales table or the register.

In some cases, retailers use the financing itself as a profit center. This is common with auto manufacturers, for example, General Motors makes money on the financing, as well as on the sale of their cars themselves. And the Discover card was initially a way for Sears to sell products and make money on financing. 

For most small businesses, however, it’s impractical for them to roll out their own in-house finance company. Most don’t want to be out the cash flow while awaiting repayment. So it makes much more sense to contract with a retail finance company and outsource all the credit underwriting, administration, billing, and collections to someone for whom those are core competencies. 

The Characteristics of Retail Finance

Retail financing can be offered as a payment option without the need for an additional credit card terminal. This is because, in most cases, store terminals are equipped with point-of-sale software that includes these methods of payment.

In other words, a retail business does not need a physical credit administration system since modern technology allows finance operations to be conducted online.

Therefore, if you have a digital retail store, you can easily integrate an online credit administration system into your website as a financing option.

Retail Financing Helps You Serve All Credit Types

Retail customer finance companies will often serve a wider swathe of customers compared to bank lenders. Many people can’t qualify for a credit card. Or if they do, it may be a secured card or one with a very low spending limit.

In many industries, that doesn’t cover an average ticket size. If your customer needs a new roof, their bank card with a $600 limit isn’t going to do them much good. You need to offer additional financing options to help close the affordability gap.

The Difficulty with Traditional Lenders And Credit Facilities in Retail Financing

Many times, shop owners and retail sector merchants looking for a retail financing solution go to their own banks, and to traditional lenders like them. 

But these aren’t always the best choice for retailers looking to offer retail financing, for the following reasons: 

• Tight, traditional credit standards. 
• Long and tedious application and approval processes. 
• Inflexible lending rates
• Required terms are too short and payments are too high to make your products affordable
• No industry specialization. A bank lender may not understand you or your customers as well as a lender who specializes in your business. 
• No case-by-case underwriting or manual review of borderline applications.

Consumer Financing Guide for Small Businesses

Posted on April 1, 2022

Consumer financing can be a tricky subject. If you don't know what you're doing, it's easy to get in over your head with debt and interest rates that could send your business into bankruptcy. 

However, consumer financing is an important topic for small businesses that are looking to grow their customer base. When done correctly, consumer financing can promise loads of benefits, including increased service orders and easier customer retention.

In this guide, we will discuss how to use consumer financing as a tool to increase revenue and reduce the need to generate capital internally.

Breaking Down Consumer Financing For Small Businesses

Consumer financing for small businesses is a practice whereby small business owners provide point-of-sale finance options for customers so that they can fund their given payment purchases.

Basically, instead of paying for a service or product upfront, the consumer follows a set of predetermined terms and conditions which indicate how much they pay and for how long.

With consumer financing, a customer does not pay for a good or service all at once, nor are they obligated to seek a third-party provider to cover the cost of their purchase. Small business owners are the ones who facilitate a customer's access to them, either through partnering with a third-party financing company or directly managing it.

In most cases, the latter is not favorable for small businesses. Apart from the fact that most startups and small-scale businesses do not have the financial capital to offer this type of services themselves, having to manage such complex finance plans on your own is time-consuming and will be difficult to marry with your daily operations.

The Characteristics of Consumer Financing

A small business does not need a physical credit terminal or credit administration system to offer this financial solution to customers. Consumer financing can be administered through the software platform and database of a third-party lender. That way, by simply linking it to your website, the creditor assumes the management of consumer repayments.

Customers who opt for point-of-sale consumer financing are expected to pay interest on their purchases. In most cases, the interest rate is higher than what the customer would have been charged had they used their credit card to fund the purchase.

Similarly, depending on the lender, the repayment terms and conditions (like equal monthly payments, installment payments, etc) also tend to be determined directly by the lender. In most cases, they are non-negotiable.

However, that isn't always the case. It depends entirely on the financing party offering financing.

Some third party financing companies do not have elevated interest rates when offering consumer financing to clients.

All in all, you as a small business owner must ensure that the financing programs and payment plans delivered by your third party financing provider are ideal for your customers.

The Main Benefits of Consumer Financing To Small Businesses

As a small business, there are multiple benefits associated with offering consumer financing as a point-of-sale payment plan.

To start, this type of financing option comes across as very attractive to small business customers. Clients like when small businesses put them in charge of their spending and allow for the purchase to be paid off over time.

What's more, it also impacts positively on your ability to retain customers over time. This is because consumer financing enables them to make a purchase now and pay off the balance at their convenience, without any requirements or penalties.

Additionally, consumer financing provides your business with more opportunities for growth due to newly-found access into previously untapped markets; people who are not able to afford paid upfront purchases can still gain access to your services.

Offering consumer financing also helps you to avoid a potentially costly collection issue with your customer if they default on payments. This is because the third-party lender is the one who assumes the risk of non-payment, not you as the small business.

Of course, consumer financing is a great way to meet the demands of customers who cannot access your services because of bad credit scores, credit checks, or anything related to their credit history.

When done the right way, offering financing options to clients can be the cornerstone of your growth strategy throughout your business lifecycle.

The Challenges of Traditional Consumer Financing Lenders

Small businesses profit heavily from a well-structured consumer financing plan.

However, the key is to be meticulous with the third party providers with whom you align.

In most cases, small businesses turn to banks, credit unions, and other traditional creditors to handle their consumer financing solutions.

These are not the ideal partners for small businesses.

The challenge with traditional consumer financing providers is that they are focused on a limited number of lending products and services.

This can make it difficult for small businesses to receive the type of consumer finance solution that best suits their needs from these organizations, since many banks only offer loans in certain industries, such as construction or transportation.

What's more, the approval process tends to be long and drawn out, at times taking several weeks to get a response. By the time your customer is approved, chances are they would have already leveraged the services of your competitor.

The most notable challenge of partnerships between small businesses and third-party lenders for consumer financing lies in the terms and conditions offered. In most cases, these lenders offer ready-made, non-negotiable finance plans to customers.

Offering one-size-fits-all finance plans to customers is never ideal. Each customer has a unique financial situation. What may work for someone may not work for another person.

The solution?

Flexible finance plans.

Why Flexible Finance Plans Work For Small Businesses

A flexible finance plan has terms and agreements tailored to the situation of a customer.

Consider an example where one customer needs $5000 but they have no credit history or collateral, while another requires only $1000 with excellent collateral in the form of property.

The first customer would be given a financing plan with high interest rates as their risk profile is higher than the second one.

The second customer would enjoy lower interest rates as the risk of not repaying is much lower.

Flexible finance plans are tailored to a consumer's needs and they can be an effective tool for small businesses that want their customers to get access to financing.

It ensures that all parties benefit from the agreement, which increases the chances of a long-term, mutually beneficial relationship.

Businesses that offer flexible finance plans can increase customer loyalty and get more repeat business.

They are also able to reach out to customers who would not have been eligible for financing otherwise.

This type of consumer financing is an excellent tool for small businesses looking at growth opportunities in their sector or region.

It is also a very good option for businesses that are looking to expand into new markets or launch an entirely new product line soon.

The recent economic downturn has made some entrepreneurs reluctant to risk their capital on expanding, but consumer financing can help them break out of this stagnation and start growing again at a reasonable cost.

Not all third party lenders offer flexible finance plans to small businesses for consumer financing.

However, there are a select few that do.

Here's how you can partner with one that has a proven experience delivering these services.

Flexible Finance Plans with Time Investment Company

Time Investment Company is a consumer financing company that offers flexible finance plans to small businesses.

The terms and conditions of the funding we provide are very favorable and there is no limit on how much money can be borrowed on behalf of customers.

As a small business, you do not have to worry about receiving the full payment on your service order. As soon as your customer confirms, we release the full amount owed to you on your service. This is a win-win because you can secure the working capital you need immediately.

As a company that has dedicated the last 40 years to crafting winning finance solutions for businesses, we have successfully funded over $750M in loans across 250K companies.

Don't settle for less with a traditional third-party lender when Time Investment Company can assist you in doubling down on winning flexible finance plans.

Partner with Time Investment Company Today

Consumer financing is a viable and profitable initiative for small businesses.

That is why it is so important for businesses to partner with the right lender to assume the credit risk and properly manage this financial solution.

Time Investment Company can help you design flexible finance plans that attract more customers and help you scale your business.

Partner with us to take your making offering consumer financing as stress-free and straightforward as it ought to be.

Schedule a call with one of our finance experts to discover how you can partner with us today.

How to Grow a Contractor Business

Posted on April 1, 2022

If your business isn’t growing, it’s dying. Continued growth is the engine that generates opportunities for your best employees and long-term financial security for you as a business owner.

Here’s what you need to do to lay a solid foundation for long-term growth and success for you, your family, and your workers. 

1. Reinvest Cash Flow For Growth

As a business owner, you’ve got to be disciplined about managing your expenses and pushing most of your excess cash flow back into your business. 

It’s very tempting to pull cash out of your business for yourself. We get it. We all have expenses. You can always find some short-term use for the money. It feels good to pay yourself a fat salary as the business owner. And drive around in a high-dollar truck, etc.

But if you want to grow your business faster than competitors, you’ve got to be leaner. The priority for available cash flow has got to be reinvesting in your business’s growth, and capacity for growth. 

Before you increase your own salary as the business owner or pay yourself and your partners a dividend, stop and think: 

• Can I invest the money in another truck and crew? 
• What profitable advertising can I do that I’m not doing yet? 
• Can I double down on my successful advertising and marketing?
• Can I invest in the automation of back-office processes? 
• Is my IT up-to-date? Or is my growth hobbled by outdated, inefficient technology?
• Am I getting the most out of my website? My marketing campaigns?
• Can I buy leads for my salespeople? 
• Can I hire an office manager or assistant to help me focus more on supporting my salespeople and improving my customer experience? 
• Can I buy bulk inventory and save money on inventory I’ll have to buy anyway? 
• How can I invest in employee training to improve efficiency? 
• Can I pay more to my salespeople, and recruit another good salesperson? 
• Can I do a pay raise or bonus to my most productive and valuable people? 

Lots of your competitors don’t think this way, after a certain point. They hit their comfort zone, and then they start taking too much money out of the company for themselves instead of reinvesting it for growth.

It doesn’t take long for those businesses to stop growing. Then they stagnate. 

Their top performers and ambitious employees who want more for themselves and their families get frustrated and begin to leave the company - for growing companies like yours. 

Resist the temptation to pull too much money out of your company - especially in the early years. Pull out the bare minimum. Reinvest everything you can for growth, and maximize the value of the enterprise at sale.

Your measure of success should be your company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) and the book value of your company (assets minus liabilities). Not your own salary. 

As a business owner, you may go through long periods of time during which you have several key people earning more than you. This is as it should be. Relax. There’s nothing wrong with this arrangement. Because your real compensation, long term, is the steady growth of the value of your company. Not your salary and dividends.

Eyes on the prize. 

2. Focus on Sustaining Your Current Clients

Of course, you want to bring on as many new customers as you can handle. But don’t focus on new customer acquisition at the expense of servicing and marketing to your existing accounts.

Here’s why:

Studies show that the cost of acquiring a new customer from scratch is as much as seven times higher than generating a sale to existing customers. When you can get to the presentation stage in the sales cycle, a new customer buys between 5 and 20 percent of the time, on average. An existing customer buys between 60 and 70 percent of the time. 

3. Embrace Change

Creating a culture receptive to change is a must in the contractor business. It’s important to have intelligent, flexible, and capable leaders at every level of the organization who can adjust to changes in technology and industry practices and who can grow with your firm. 

The best way to do this is by starting at the top and working your way down so that everyone understands their role in building or maintaining goodwill with customers, vendors, partners, and communities.

It all stems from having an open dialogue about what needs to be accomplished with team members, your general superintendent, and all field crews. In doing so, engaging staff in the decision-making process as you navigate possible changes to get their feedback and buy-in is crucial. By feeling like they contributed to the decision, they will be more likely to embrace the change, which will not only contribute to the overall success of the initiative but will also increase employee morale.

This can't happen if there isn't transparency in your company culture.

The best way to achieve this is by holding regular all-staff meetings, and discussing how changes will affect the business as a whole. Share any information that may be pertinent to employees.

This can include anything from employee benefits or new company initiatives that will be implemented as your business begins to scale.

4. Hire People Who Can Grow With You

You need a good team to support you. As the owner, you can’t be everywhere. That limits your growth very quickly. 

To grow your business, you need to hire staff that’s capable of personal and professional growth along with you. 

Don’t get cheap and just hire the bare minimum worker for the job. When you hire a brand new installer, hire the person you can see leading a crew of installers in a year’s time, and potentially managing multiple teams of installers three to five years from now.

When you hire a new personal assistant or secretary, hire the one you can see acting as an office manager in three years, directing several people, and running your back-office operations.

That means you want people who are serious-minded, ambitious, who tend to seek out responsibility instead of avoiding it, and who have the candlepower to think on their feet, and the judgment to make sound and timely decisions even when you can’t be there.  

You’ll have to pay a little more to get and keep them.

But you won’t regret it. 

5. Make it Easy for Customers to Buy From You

Cash is king. But not many people have a lot of it.

Offering a flexible and affordable way to finance your service is the best way to reach everybody else. That’s where we can help.

Without an affordable financing solution, the sales discussion quickly gets reduced to price. The contractor has no opportunity for adding value and upselling because any solutions are limited to whatever cash the customer has on hand.

The customer always has an excuse to ‘think about it.’ And then shop the deal around to competitors.

And some other contractor can always undercut you for less. You do all the legwork, and you lose the deal. 

Having your own financing solution, with a lower interest rate than credit cards, easier to get than a bank loan, and the capacity to lend enough money to cover the project is vital to closing sales and growing your business. 

To avoid needless complications that can derail your sale, it’s important to work with a third-party finance company that: 

• Understands your industry and typical ticket sizes and transactions
• Makes it easy to apply
• Doesn’t make customers jump through hoops
• Makes quick credit decisions
• Applies common sense underwriting
• Looks at more than just FICO scores
• Pays you quickly.

6. Offer a Best-In-Class Customer or Client Experience

Offering top-notch customer service is a great way to grow your business. Look for ways to make doing business with you a memorable and pleasant experience. 

Hotels figured this out a long time ago: People might not remember the little things that go wrong during their stay. But they remember the mint on the pillow. 

Chick-Fil-A changed the way quick-service restaurants operated. You still order food at the counter. But they have (fake) flowers on the tables. Pleasant workers (paid a little above the norm for other quick-service restaurants in your area) say “my pleasure” at every opportunity. And they come to your table to refill your drinks.

Every other quick-service restaurant chain in their markets had to up their game in response. Chick-Fil-A set new standards for the fast-food experience. And enjoyed terrific growth at the same time.

One home theater installer we know would take before-and-after photographs of the installation, along with progress notes along the way. He also collected operations manuals for each of the major pieces of equipment he installed. And his staff’s list of the greatest 100 movies ever made. 

When the installation was done, he’d present his customers with a beautiful, faux-leather-bound “yearbook” of their installation, and a cheese and wine basket or family snack basket for his customers to enjoy for their first night enjoying their new home theater together.

Think he got referral business? You bet he did! And still does, 15 years after we learned this idea from him. After acquiring several of his competitors and growing his business the whole time.

Social Media Marketing for Home Improvement Companies

Posted on April 1, 2022

In a statistical report published by Backlinko, about 4.48 billion people are now using social media. This is more than double the 2.07 billion social media users in 2015. 

With the right tips and techniques, you can grow your home improvement businesses' presence online and use the internet as a tool to attract potential clients to your construction business. 

What Is The Purpose of Social Media Marketing?

Social media marketing involves using social media websites to promote brand awareness or sell a product or service. This involves creating and sharing content that can drive your audience.

While marketing your company on social media, the goal is to:

• Create a credible online presence
• Build an interactive community
• Sell your services
• Increase your Return On Investment (ROI)
• Increase awareness about your brand
• Offer good online customer service to your customers
• Listen to people's opinions about your business
• Advertise your home improvement business to a larger audience.

Best Social Media Marketing Strategies

Social media marketing isn't just posting random content on your Facebook business page or Instagram feed. There is so much more to it. If you want to build a digital brand presence, you need to develop a social media strategy to guide your decisions.

Here are ten of the best tips and strategies you can use to generate leads and sales for your home improvement business:

1. Define Your Target Audience and Social Media Platforms.

You can't be active on every platform. Decide whom you want to reach - and then choose a handful of social media platforms based on that. The goal isn’t to reach a larger audience, but to reach the right one. For instance, as a home improvement company, you should focus on online platforms that are used frequently by most homeowners.

2. Build A Credible Social Media Profile.

Once you have decided which social media networks to use for your marketing campaign, the next important step is to create an authentic profile. Your profile must be able to convert more customers to your business.

Ensure that your branding, that is, logo, images, name, etc., is consistent throughout your marketing media and website. This makes it easier for people to identify your brand.

3. Engage Your Audience with Quality Content.

It’s important to create engaging, useful, value-added content for your audience. Your content may include blog posts, articles, tutorials, reviews, videos, webinars, white papers, ‘best practice’ sheets, checklists, guides, or anything else you like.

Good content does not necessarily have to be lengthy and boring articles or posts about your business. They could be pictures or time-lapse videos depicting recent projects, with short and exciting captions and dramatic before-and-after posts. 

Finally, provide tips and advice to your customers on how they can improve their homes. Most people love to hire those who have expert knowledge in a field. Telling people how to beautify their home, make minor repairs, enhance curb appeal or property values, find ways to finance home improvement and remodeling projects, or DIY tips makes them want to see your page often – and eventually pay you for your work.

4. Interact With Your Followers.

Frequent interaction helps boost customer engagement, trust, and loyalty. You can interact with your readers or viewers by responding to their questions, private messages and comments, or appreciating their replies. This makes your customers and prospects feel important, because they should be. 

Also, responding to negative comments with kind words is an excellent way to showcase your good customer service. Everyone gets a bad review sooner or later - often through no fault of their own. Many people don’t worry about a bad review if they see an immediate response from the company management taking ownership of the issue and doing something about it. 

TIP: spark up engagement by posting questions or prompts on your site or on industry or home improvement bulletin boards. For example, you could ask for their opinions, their preferences, and a lot more.

Give more than you get. ‘Like’ and ‘share’ quality posts - even from your competitors. Contribute to discussions. Shed insight on trending topics. Add value to the community. All this builds brand credibility and goodwill. 

5. Post Consistently.

Consistency is a significant key to creating successful online brand awareness. Abandoning your followers after building an online presence will affect your brand reputation. Instead, ensure that you choose and stick to a specific time to post relevant content and engage your followers regularly. For example, you can post 3 to 5 times every week. This way, they will regularly see your posts, and you can maintain top-of-mind awareness.

6. Run Pay-Per-Click (PPC) Advertisements.

With more companies using social media platforms these days, it is becoming more challenging to break away from the crowd and stand out. 

This is why many businesses pay money for online advertising and social media marketing.

PPC or Pay-Per-Click advertisement is a form of online advertising in which you pay the publisher of the ad every time someone clicks on the link. This is great because you do not have to pay if your link is not "clicked on." So, you would only pay for a working ad. This advertising model is prominent in Google Adwords and on social media marketing websites like Facebook.

Google Ads allows you to rank for specific keywords that are associated with your business. For example, a person looking for a renovator to hire in California will probably type in "Renovators in California" or "Top 5 Renovators in California". So, if you run an ad to rank for that keyword, your service or social media page will be shown prominently among the results.

In contrast, Facebook Ads (now ‘Meta’) works by suggesting your ad to different users based on their location, preferences, search history, and interests. Therefore, the users do not need to run an immediate search request before the ad is shown.

7. Provide Valuable Offers To Potential Customers.

Certain customers will not buy your services until you make a compelling offer. For example, you can offer a DIY tutorial, a free estimate or consultation, or a detailed design guide. 

A free estimate is a great tool to attract interested people who are still contemplating whether to hire your company. Similarly, the design guide will help your buyers make quick decisions when choosing the perfect interior for their home.

Offering a free initial consultation can help build a good personal relationship with your potential buyers. Plus, it is an excellent way to establish your own expertise and credibility and identify the customer’s true needs. 

8. Scout Out the Competition.

You can learn a lot from what your competitors are doing on social media. Here’s how to conduct a competition analysis - a key component of your SWOT (strengths, weaknesses, opportunities, and threats) analysis, which every business owner should prepare and continually update. 

Identify Your Competitors.

• Select a list of high-ranking keywords relevant to your brand.
• Find out companies ranked for the selected keywords on social media websites such as Facebook or search engines like Google.
• Check out other companies your customers are following.

Tip: Pay close attention to what the buyers say about your competitors - their complaints, reviews, and opinions. You can work on these to improve your own company. Learn and improve from their mistakes - not just your own. 

Analyze Your Competitors' Weaknesses and Strengths.

Some of your competitors might have a strong online presence on a platform and a weaker one on other social media platforms. It is crucial that you look out for this and use it to your advantage. For example, if a competitor has a stronger Facebook presence but isn't active on Pinterest, you can focus on building your Pinterest presence.

9. Create a company blog.

As a home improvement company, a blog is where you can post exceptional content valuable to your customers. In addition, having a blog can help you to rank better on search engines. Google and other search websites often suggest blog posts with the most relevant results to search queries entered by the users. Consequently, creating blog posts on content such as DIY tutorials, FAQs, tips, and guidelines related to home improvement makes people more likely to visit your site.

10. Promote Your Social Media Page.

While you use your page to promote your brand's website, you should also use other channels to promote your social media page. You can add links to your social media page on your website. You can also download the social websites' icons from Google and link them to your account. So, when people visit your website, they can easily access your social media page.

Ready to Take Your Business to the Next Level? 

Building a social media presence is great for your business to reach a larger audience. However, your customers need to be financially buoyant to patronize your business.