Customer Financing is the New Currency For Service Businesses
Customer financing was once only available to retail, point-of-sale businesses . We’ve all seen the signs in furniture store windows trying to draw people in with high cost lease programs that can be paid off at no cost within 90 days, that they never will.
Prime credit consumers have, in recent years, had the availability of customer financing when dealing with their medical needs . While lenders like Synchrony Financial typically seek consumers with credit scores of 700 and higher, the average credit score in the U.S. hovers around 660.
But even at that, most businesses were excluded from offering any financing at all. Businesses offering a service were mostly excluded from providing an in-house customer financing solution. Businesses with higher sales tickets would also be shut out of offering customer financing. Customer financing was also unavailable to businesses that were home based or made their sales unconventionally.
Customer financing was far from democratized.
Frankly, I’m not certain how these businesses have survived so long. Studies have found that sixty percent of consumers don’t have $1,000 available to them should an emergency arise. That’s mind blowing. So, how in the world can a law firm, for example, find a path to a $5,000 retainer fee. The frustration must be indescribable. Businesses work hard to drive a prospective customer to their door. Someone who has a need or a big want and you’re the one they’ve selected to do business with, only to have it all fall apart because of the money. This happens to businesses every single day.
I felt the frustration and saw the opportunity. It was clear as day. It was a problem waiting for a solution.
Flexxbuy has developed a multi-lender platform that checks all the boxes.
Customer financing is now available for just about every business imaginable. Businesses with sales from as low as $1,000 to as high as $50,000 can now make customer financing an options. The loan platform consists of lenders that will be extremely competitive for people with good to excellent credit and lenders that will approve individuals with sub-prime credit scores as low as 550.
With this customer financing solution, a business prospect can complete a simple on-line loan application from any place and any device, get it looked at by as many as ten lenders, and have decisions in a matter of seconds. And there won’t be any credit report inquiries.
Is Customer Financing a better choice than using a credit card?
A question that is often asked is, should an individual choose to utilize customer financing over using a credit card, if they have one available?
This answer contains a few tentacles. First, it is easy to compare the best interest rate being offered through customer financing verses the rate that will be charged by the credit card lender. Since submitting an application results in no inquiry, it’s easy to get all options that are available, risk free.
Second, will using the credit card exhaust or use up a substantial amount of the consumer’s available credit access? This is a very important question. From a practicality standpoint, available credit is finite. When used up, it won’t be available in the event of a future emergency. Also, what will the hit mean to the individual’s credit score? A big impact of credit scoring is the amount of outstanding revolving debt compared to the available amount of credit. An individual’s credit score will start declining when that number crosses over 30 percent.
At the end of the day, businesses need every option available to them in order to sell their products and services. At the very least, customer financing will be that last ditch way of making the numbers work. Or, it can be that driving force that lead more people to the door of a business. Either way, businesses are finding out that they can’t do without the option of offering customer financing.