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Home Improvement Loans: To Help Sell Projects

By Steve Gibbs, Tag Team Global

John Johansen of California-based Systems Paving (above, left) uses a personal computer to brief prospective customers on financing options. Making the application process easy is critical to keeping homeowners upbeat about projects. GE Money is one lender working with contractors to finance outdoor improvement work.

What happens when a homeowner's landscaping dream exceeds their pocketbook? One new idea has contractors help clients secure a home-improvement loan. The approach may be something to consider for your own business plan.

Unlike some of their home improvement cousins, landscape companies have taken longer to embrace consumer financing. Most contractors specializing in remodels and other work have used consumer credit as part of the sales process and a way to energize business. Now, more landscapers are making financing part of their plan.

"The fact that we offer financing shows a level of professionalism and sophistication that sets us apart from many competitors," explained Jay Philip Eriv, president of Groundskeeper, a 34-year old company in New Jersey.

As most landscape contractors know, there is a point in the sales presentation process when the customer and contractor must discuss cost and payment options. That is the critical moment when many jobs are either lost or scaled down. Financing options, presented properly, divide the project into affordable payments and enable the customer to dream bigger.

"We have had situations where we might not have gotten the job had we not offered the customer a good financing option," said Eriv. "Financing is a great way to close the deal."

Eriv's business does a broad range of work, with projects ranging from around $5,000 to as much as $200,000. Such a spectrum of jobs requires financing versatility. That's why Eriv's company offers a revolving credit card product for smaller projects and an installment loan program for big jobs.

For many landscaping companies, the question is not whether financing is helpful as a marketing tool - it obviously is - but is it worth the hassle? The perceived "hassle factor" is perhaps the biggest reason a lot of business owners refuse to offer financing. Having to learn financing terminology and deal with application paperwork may seem daunting, especially if you have a sales staff to train.

"Among some landscape companies I think there is a misunderstanding about how financing can help their business," said Diane Leider of lender GE Money. "These business owners also tend to be extremely busy and think that financing will generate a lot of extra office work and red tape."

Consumer financing lets contractors show homeowners a loan option to fund home-improvement projects that enhance home value.

"Less of a Hassle"

Eriv said that his program has been less of a hassle than he thought it would be.

"The application process for revolving credit is very fast and easy. You simply fax or email the application form and you get a credit decision in a matter of minutes," said Eriv. "Installment lending takes a bit more time, but the process is relatively easy and is certainly well worth the effort."

Larry Green clearly sees the value of financing. Green is president of Systems Paving, a hardscaping company specializing in interlocking paving stones in Newport Beach, Calif.

"Larry is a huge advocate of on-going training," said GE's Leider. "We've worked with them to help their sales associates learn the terminology and the application process, and now that training is really paying off for them."

Green noted that his company is seeing a high rate of credit approvals as a result of his team working with customers to obtain accurate credit information, which improves approval rates.

"The simplicity of the application process and a good approval rate are the keys to a successful financing program," he noted.

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June 18, 2019, 6:42 pm PDT

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