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Zero Fee Contractor Financing: Everything You Need to Know

Last updated 12/07/2018 by

Ben Luthi
As a contractor, one of the hardest parts of the job is getting paid. If your customers don’t have cash, they need to secure financing before they can pay you. And even then, it can take a while to get what you’ve earned. Zero fee contractor financing may help you collect your payment faster.
Contractor financing can make the entire process easier for both you and your customers. Specifically, point-of-sale financing can provide financing for your customers in an instant and ensure that you get paid promptly.

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What is point-of-sale zero fee contractor financing?

Point-of-sale lending allows your customers to apply for and get a loan while they are at your brick-and-mortar store or your website. This creates an easier way for them to shop around and get funds as soon as the same day.
These loans, unlike credit cards, have a set interest rate and repayment period. This makes the repayment process more straightforward.
At the same time, the customer doesn’t have to go around shopping beforehand for a personal loan or put their home as collateral with a home equity loan.

3 ways point-of-sale financing can boost your bottom line

Customers have plenty of options when it comes to financing a job. But offering point-of-sale loans could give you a leg up on the competition.
That’s because you can tailor your financing to the needs of your customers and give them more flexibility.
Here are three specific benefits you’ll get with this type of contractor financing.

1. It can boost your sales

Hiring a contractor is expensive. Many customers may opt to request basic services because they can’t afford more. But with sufficient financing options, it could be easier for them to get the funds they need to pay for your services.
In fact, a 2012 study by Forrester Consulting found that PayPal’s Pay Me Later feature, which acts as a point-of-sale loan, resulted in a 75% increase in customer order value. Why? Because the monthly payments made the purchase more affordable.
“The customer can realize their larger vision with a project that is out of their budget,” says Nishank Khanna, chief marketing officer for Clarify Capital.
“If your budget for a kitchen remodel is only $25,000, but your ideal kitchen costs $50,000, point-of-sale financing makes the larger vision possible.”
So, zero fee contractor financing offers more than just convenience. It could also provide customers with more flexibility to pick a financing option that best suits their needs and qualifications.

2. It can improve your cash flow

Collecting an invoice can feel like pulling teeth. It’s especially stressful if you need capital for the current job or other jobs. With point-of-sale financing, you’re more likely to get paid as soon as the customer gets the loan funds.
With some programs, you may even be able to track the approval and funding process of the loan, giving you everything you need to know to get paid faster.
And once you are paid for the job, you won’t have to worry about collecting any other payments — the lender takes care of the actual loan payments.

3. You may attract more customers

If prospective customers know that you offer flexible payment options, they may be more drawn to working with you. For example, the Forrester Consulting study found that merchants who offered point-of-sale loans boosted their sales by 32%. That’s because people were more willing to make a purchase if they had the financing available.
Khanna says, “Let’s say a customer has two bids from contractors – one from you and a lower bid from a competitor. Even though your bid is higher, she may be more likely to go with you if you provide point-of-sale financing. It takes away the sticker shock.”

Introducing SuperMoney’s point-of-sale financing platform

Several lenders and companies can provide contractor financing through point-of-sale loans. So, it’s important to shop around to find one that offers customers the right amount of flexibility without charging you an arm and a leg for it.
For instance, many point-of-sale financing companies charge a discount fee of 10% on each loan. So, if you do a $20,000 job, you lose $2,000 right off the bat. Since you’re often working with large payments, you may feel like you have to charge customers more just to make up for the fees.
The good news is that there are companies that eliminate this concern entirely. SuperMoney’s point-of-sale financing platform, for example, doesn’t charge any dealer fees or discount rates. This means that you get to keep the profits.
SuperMoney will also do the legwork for you. For starters, you’ll get a specially designed landing page for your website, allowing customers to apply online. You don’t need to provide an application or anything.
Once the customer fills out the form, they’ll get pre-approved offers from several lenders. Then, when they pick one and officially apply, they can get approved and receive the funds quickly. They’ll pay you with the funds and the lender handles the actual payments.

Zero fee contractor financing: The bottom line

Point-of-sale financing will not only help you gain more customers, but it can also boost your sales and improve your cash flow. That is because point-of-sale loans offer your customers the type of flexibility and selection they may not get any other way.
As you shop around, make sure to work with a financing company that doesn’t charge you high fees to use their service. And let your customers know from the beginning of the bid process that you provide the option to resolve potential concerns about money.
Over time, you’ll notice that point-of-sale zero fee contractor financing can make a big difference for your business.

Ben Luthi

Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.

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