Every business has a common goal: To make more money. In my 25 years as a business professional in the home improvement sector, I’ve seen firsthand the power financing can provide for increased sales, customer loyalty, referrals, and job satisfaction. By implementing or improving an existing financing program within your business, you too, can reap the profits. It’s a simple “best business practice” that shouldn’t be ignored.

Second-look financing in particular, is a tool that enables contractors to access a credit segment that nearly half of the American population falls into: customers with credit scores below 670. Mr. Roof, RC’s 2016 Roofing Contractor of the Year, recently incorporated Fortiva Retail Credit’s financing program to reach this impaired-credit segment. Robert Starr, Mr. Roof’s vice president of sales and operations, shared some of the benefits throughout this column.

With the residential roofing market positioned for significant growth in 2017, according to Freedoni’s Residential Roofing: United States Report, more potential customers will require financing to complete roofing projects. Roofing contractors who want to boost sales and business growth will need to make financing an important part of their business model. By adding a second look option to reach more customers, they can increase sales, loyalty, referrals and job satisfaction – positioning their business for long term success.

The Tiered Approach

Closing the maximum number of sales requires a tiered financing program including both prime and second-look financing solutions. While your prime financing provider is focused on homeowners with FICO scores above 670 (aka prime credit), your second look financing provider focuses on the other half of the population with lower credit ratings. For example, in situations where a Mr. Roof customer is not approved by a prime lender, they can apply through Fortiva Retail Credit, and in 25 to 50 percent of cases, Fortiva Retail Credit will provide an approval. Thanks to the second-look program’s proprietary underwriting system — which allows Fortiva to look at additional qualifying data beyond a homeowner’s credit score — Fortiva Retail Credit helps save a large percentage of sales that would be lost if prime financing is the only option.

Emergency and Safety Concerns

Detrimental weather, unforeseen circumstances and general aging can commonly put a home’s roof in need of immediate replacement or repair. But even if a homeowner has insurance, it’s not unusual for policy exclusions to require funds from coming out of pocket. Customers who are unable to finance the expenses outright are left to save up for the repair, leading to a delay that risks additional damage, such as flooding, structural deterioration and electrical issues.

“Some roofing companies treat these people as pariahs,” Starr said. “They forget that the home is the customer’s most valuable asset — their castle. We use second-look financing to help out customers who couldn’t necessarily get the repair without it.”

By offering multiple financing options with affordable monthly payments based on a customer’s budget, roofing contractors can quickly address emergency situations and begin immediate replacement or repairs. With the emphasis on quick resolution, Starr advises roofing contractors to be mindful of the provider’s application process. “Second look lenders often club you with paperwork,” he said. “There’s not a mile of paperwork for the customers with Fortiva, and they really streamline the process. It’s a huge advantage anytime we can save paperwork.”

Fortiva’s process is completely paperless — the application can be filled out online with a smartphone or tablet, customers can sign and receive their documents digitally, and even funding is sent within 48 hours without the need for completion paperwork.

Another situation in which second-look financing is a powerful offering is when a customer has just purchased a home but wants to secure credit for home improvement needs, including the roof. “The mortgage is backed by equity, but home improvement in most cases is done through a signature loan, which requires top-of-the-line credit,” Starr explained. Second look financing helps to ease the stress and disappointment for these homebuyers, who in many cases are first-time buyers with many more roofing repairs ahead of them.

More Approvals and Referrals

It’s a given that happy customers are good for business. In an industry like roofing, which is often impacted by the negative press of scammers and shoddy workmanship, creating opportunities for high customer satisfaction is paramount to business success. For families that might not be able to get needed repairs without it, offering second-look financing can have a huge return of customer satisfaction. “We went into second-look financing to help those people out — whether they’re new homeowners or homeowners that have issues and don’t have the credit to get approved,” Starr said. “Those are the customers that write countless letters that say ‘thank you’ and ‘you made an extra effort.’”

Mr. Roof uses these pieces of gratitude as daily reminders of the impact their business has on a segment of the population that many overlook. For a company that prides itself on providing excellent service, financing options are a staple benefit that continue to grow business year after year.

In addition to creating lifelong customers, Starr also notes that roofing contractors can expect referrals out of the deal. By helping these customers who might have delayed a project due to funding or credit challenges, your company’s great reputation is being shared with family and friends who are likely to also have a need.

Monthly Payment Options

“The most important thing for a roofer or any contractor is going to be the ease of use, the approvals and the payments — our customers all need manageable monthly payments,” Starr said of weighing second-look financing providers. Affordable payments are especially important as advancements in roofing products continuing to grow and grant contractors the opportunity to make more money selling them. With every day, homeowners becoming better informed about new upgrades that provide algae resistance, hail protection, heat reflectivity and aesthetic enhancements to improve their home’s performance, value and overall look. Second-look financing serves as an opportunity to offer an upgrade to a credit-challenged customer who has saved cash for a basic roof, but might want to opt for a higher-ticket item if they can afford it. By selling more upgrades (which typically hold higher profit margins), you can differentiate yourself from the competition and dramatically increase your top line revenue.

Reduce Employee Turnover

When a contractor makes multiple financing options available, they create a win-win situation, not only for their customer, but for their sales team, too. Knowing second-look financing is available for credit-challenged customers can boost a sales professional’s confidence in getting a roofing project approved. With more confidence and higher approval rates, contractors and their teams can close more sales that might have been lost due to funding issues. The results are higher commission checks, increased revenue and greater job satisfaction, which help reduce the expense and frustration of employee turnover.

In summary, second look financing provides an exciting opportunity for roofing contractors to take advantage of a market that’s finally positioned for significant growth. By offering financing options for credit-challenged customers, you can generate benefits that are vital for ongoing success.