Consumer Financing for Small Business Owners: Funding Options and Best Practices
Published June 06, 2024
Consumer Financing for Small Business Owners: Funding Options and Best Practices
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The budget-conscious consumer is becoming more elusive and small businesses continue looking for new ways to entice clients in this competitive economy.
That’s why small business owners are embracing consumer financing options to attract more customers, increase sales, and generate revenue faster than ever before. When small businesses offer consumer financing, customers have more ways to pay for the goods and services they need when they are unable or unwilling to cover the costs in one lump sum.
Giving customers the choice to pay upfront or over a series of fixed monthly payments increases your chances of closing a sale. The hesitance to proceed with a purchase, particularly on a high-ticket item, almost always starts and ends with the affordability of the cost.
Financing options through Fund My Contract can put the customer at ease by making the cost affordable, regardless of his or her financial situation. A hesitant or reluctant customer worries about fitting the cost of your product or service into the monthly budget when they are obligated to pay in full at the time of purchase.
Financing eliminates those worries when a customer can participate in one of many possible payment plans with flexible repayment terms and low interest rates.
But deciding to offer consumer financing is only the first step. Knowing which options to provide and how to make your customers aware of these options are two of the most critical components for ensuring the best results.
How Consumer Financing Works
Your customers want to purchase the goods and services you offer. But they aren’t always in a position to close a sale due to the cost. Sure, they can afford to buy your product or hire you to perform a service in which you specialize, but they just can’t pay for it in full right now. This creates a dilemma for your customer and your business – the customer fails to obtain the product or the service they need and your business fails to generate revenue to spark growth and expansion.
The way it works is simple – your customer wishes to make a purchase but while the cost of the product or service is fair, paying it all off in full presents a problem and that can result in the customer looking elsewhere. But why let that revenue go to your competitor, when you can offer options to help your customer obtain financing and complete the sale with your business instead?
In order to obtain that financing, the customer fills out an application to split the cost over a manageable and predictable payment plan. Eligible customers will receive the funding needed for completing the sale, your business receives the amount of the sale in full, and the customer makes reimbursements in accordance with the financing option agreement now in place, and pay interest in addition to the principal amount owed.
Which Customer Financing Options are Right for Your Business?
There are two choices when providing financing options to your customers – do it yourself in-house or hire a third party financing entity to do the work for you. In the first option, your business is underwriting and managing all of the financing which means your business is backing the funds and collecting reimbursements from customers. In the second option, your business teams up with a financing company that offers a network of third party lenders and financiers to do all of that work for you.
As you may have guessed by now, there are distinct advantages to the second option.
Collections and Risk
More Lenders, More Choices
When you align your small business with a financing entity like Fund My Contract, you have a diverse network of third-party lending partners on your side. This allows for more customers to gain access to the financing they need to purchase the goods and services you offer.
A wider range of lenders means more opportunities for customers with all types of credit to participate in the financing programs you choose to offer. Fund My Contract has partnered with a variety of online lenders who are ready and willing to work with small businesses of all sizes eager to attract potential customers looking for affordable funding options.
Fund My Contract’s network of third-party lenders can help you create the financing programs that will appeal to your customers, whether they’re looking for low fixed monthly payments, lower interest rates, or flexible repayment terms.
What to Look for When Selecting the Right Consumer Financing Partner
When you’re looking for the small business financing partner that fits your needs, you want a company that offers useful advantages for helping you succeed in a crowded marketplace. Always do your homework before selecting the financial institution that will be your ally for reaching your objectives and growing your business on your terms.
Soft Credit Pulls
In order to see which financing programs your customer may be eligible to access, a soft credit pull is executed which has no impact on their credit score. Only after the customer is given options for financing and a program is chosen will a hard credit pull be performed. This puts the customer at ease for exploring their options.
Faster Approvals
Customers who are eligible to participate in the financing options you offer can get an answer quickly so your business generates revenue fast and your customers walk away satisfied knowing they were able to purchase the product or service they need with little to no hassle on a payment plan they can afford.
Higher Approval Rates
Customers with low credit scores who qualify can get the financing they need when they want it. Our network of third-party online lenders have all types of funding options and eligibility requirements available to give more customers the chance to shop with you and put more money into your business. Our main goal is to help your business expand and more approvals for more customers is an important part of reaching that objective.
Fast Online Application
Small business owners don’t want to leave their customers waiting and when it comes to financing, the application process should be quick and easy. That’s why Fund My Contract has streamlined that process to prevent potential customers from becoming discouraged and walking out the door before a sale is closed. We have created an innovative online platform that asks customers to input some simple personal information that isn’t time consuming and takes forever to complete.
Once the application is submitted, the customer can get a fast response with the programs that are best suited for their financing needs.
Best Practices for Using Consumer Financing to Your Advantage
Partnering with Fund My Contract to provide your consumer financing options to customers is something you want everyone to know about as soon as possible.
Marketing and Advertising
Once you’ve established which financing programs you are ready to provide, incorporate this information into your company’s marketing materials, announce it on social media, and always remind your customers that financing options are available when they first approach your business and again at the point of purchase.
A small business owner has to get creative when marketing their products and services to the buying public and that includes the methods through which you get the message across about the financing options that are available to qualified customers.
Know How Consumer Financing Works
Your customers are going to have questions about the financing option that might be best for their financial situation. They may not fully understand how the process works, they may be afraid to even ask because their credit score isn’t very high or they don’t want to risk lowering the score to see which financing programs they might qualify to access. Customers may want to know how much information is required on the application or if the amount they need is available to them with your financing programs.
That’s why you need to know the answer to each and every one of these (and other) important questions and Fund My Contract helps to train you and your employees to better understand how the financing process works and how your customers can participate and benefit from gaining access to these types of programs.
You may get some pushback from a customer who might feel that using his or her credit card is a better option when the time comes to pay. But when you are well-versed in the particulars of the financing programs you offer, you can explain how the credit card companies often have higher interest rates than lenders who specialize in consumer financing.
Take the Next Step
The funding option with the most benefits for your business and your customers is Fund My Contract. Reach out to one of our consumer financing experts today to learn more about the basic steps for providing the financing option that fits each of your customers’ needs and boosts sales and growth for your business.
With consumer financing through Fund My Contract, your customers can avoid the credit unions and bank loans that come with rigid terms and higher interest rates and earn the trust that will have them recommending your business to their friends, colleagues, and loved ones. Customer loyalty is one of the small business owner’s greatest assets in a competitive marketplace.
Call us today and join the long list of flailing small businesses who became some of the biggest success stories in their respective industries, thanks to consumer financing with Fund My Contract.
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