Data from the Federal Reserve finds 46% of Americans don’t have $400 for an emergency purchase, which causes an obvious problem for homeowners who have an unexpected issue, such as ruptured pipes, bathroom flooding or a broken A/C unit in the heat of the summer. To resolve this issue, dealers and contractors offer consumer-facing financing solutions, and often leverage terms and flexibility for a competitive advantage.

“Our strong financing program gives us the opportunity to say yes to customers more often,” says Lane Dixon with Hiller Plumbing, Heating, Cooling & Electrical. “When we can help those customers, our revenues are obviously stronger.”

Because plumbing, bathroom replacements and even HVAC often are unexpected emergencies, customers may not have the cash readily available to buy the products or services your clients provide. This makes financing solutions offered by dealers and contractors essential, yet more than 43% of Americans have FICO scores below 700 (according to and thus are unable to qualify for financing solutions from common prime providers such as Synchrony Financial, Enerbank and Wells Fargo. It is important for distributors to assess their clients to ensure a flexible and comprehensive financing program for the end-user.

This article will provide insight on what goes into an effective financing program, what distributors should look and ask for when assessing current and future partners, and how distributors can benefit from their clients implementing a valuable financing program.


Importance of financing

The business success of distributors often heavily relies on the practices of the dealers and contractors with which they work. Both parties ultimately depend on closing more sales to be successful and while you and the dealer or contractor must provide top-notch service and products, it also is essential that the homeowner can afford to make that purchase.

According to Matt Michel, CEO and president of Service Roundtable, the nation’s largest alliance of private contractors in plumbing, HVAC and other sectors, sales can increase by 10% and installation tickets can increase by 25% when financing options are offered. Financing options not only enable customers to make a purchase, it also allows them to purchase higher-quality equipment at a higher price – further boosting sales totals.

Beyond the sales benefit of working with dealers with strong finance programs, it also is especially vital in the plumbing and HVAC space because of the need-based nature of the products sold. A family in Arizona whose air conditioning unit breaks unexpectedly in July doesn’t have time to save the cash for an outright purchase. Beyond wanting the advantages that financing can offer, many families need it to survive harsh conditions.

“Emergency repairs and replacements are our top priority,” Dixon says. “If a homeowner’s HVAC, plumbing or electrical system is down (inoperable), our mission is to restore functionality and comfort as quickly as possible.”


Understanding finance program structures

Dealers and contractors work with different financing providers to offer the best options for their customers, but they also should work with their manufacturing counterparts in the supply chain to ensure they offer the most effective payment options. For example, a dealer may work with a prime financing provider who offers a great rate and low-down payment option, while also leveraging special offers extended by a manufacturer’s financing partners that could work better for certain customer needs and, importantly, the dealer’s business.

“Some manufacturers partner with consumer financing agencies to offer financing programs to their dealers,” Dixon adds. “Some benefits to the contractor may be rebates, discounted financing fees, integrated online applications that provide convenience to homeowners when applying for financing and may display customized private-labelling, and/or shared marketing cost contributions.”

Financing programs typically are supported by prime and second-look financing providers. Prime providers, such as Enerbank, Synchrony Financial or Wells Fargo, can approve customers with FICO scores above 700. Dealers often leverage these providers to extend low-interest and low-down-payment terms for well-qualified customers.

Effective financing programs also incorporate a second-look financing provider, such as Fortiva Retail Credit. By assessing factors beyond a simple FICO score, experienced second-look credit providers are able to approve financing for customers with FICO scores even below 500, saving sales by approving about 25 to 50% of applications initially declined by primary providers.

To further streamline the application process for dealers’ customers, leading second-look providers can instantly approve customers with a digital application, with some even able to automatically trigger an application after a customer is declined by a primary provider. These advanced, seamless applications are processed through partnerships between prime and second-look providers as well as financial technology solutions that integrate sales tools into dealer and contractor point-of-sale devices.

“Consumers are more empowered to drive how we deliver service to them,” Dixon says. “We have an application on our software system that enables on-site technicians to click into a tablet to take the consumer through everything, including the instant financing applications for all our providers. It drives a great reputation for our business because we’re able to deliver what they want.”


Advantages of two-tier financing

There are obvious advantages with prime financing options that can offer great terms for your clients’ customers, but the two tiers of prime and second-look financing work especially well together. Prime special offers help bring customers to your dealers and contractors, while second-look options save them from losing customers who do not qualify for the advertised financing terms.

“Second-look financing is an additional avenue we can take to help solve more of our clients’ home comfort and financial problems,” Dixon says. “It is beneficial to our business because it creates a competitive advantage over our competitors who do not understand or take the time to explore second- look options.”

Distributors also can provide financing directly to the homeowners they serve. Imagine a bath or kitchen distributor showroom that wisely offers second-look financing in support of its prime option to help customers with credit challenges – some of which are in desperate need of the upgrade due to damage in their homes. These customers, whose credit problems stem from a wide variety of past issues, often are grateful for your ability to work with them and will return for future purchases.

The loyalty benefits can be even more significant when the purchase situation is dire, such as pipe damage that requires new plumbing to ensure safe drinking water. Combining prime financing offerings with flexible second-look options is an effective way for dealers and contractors to meet the urgent needs of each of these families while building loyalty for return business, which then leads to more clients turning to you for products as they receive more business.


Value for distributors is multiplied

Your dealers, contractors and showrooms stand to improve sales by leveraging a comprehensive financing program that draws bigger crowds and closes more deals. As a result, distributors are uniquely positioned to benefit from this effective business practice from the entire supply chain.

The more return business your dealers or contractors receive from implementing a two-tiered financing program, the more they will turn to you for the products their customers need. At the same point, by understanding the terms and value in a comprehensive financing program, distributors are better suited to seek dealers and manufacturers offering these options as well as encourage their current partners to also implement it.


Author bios: Michael Fredricks, SVP of business development, and Bob Maisel, RVP of business development, represent Fortiva Retail Credit, the only second-look financing program owned by a publicly traded company with decades of experience servicing credit-challenged consumers. Fredricks can be reached at, and Maisel can be reached at