How to contact the right finance company.
A re you loosing sales because you don’t offer your customers financing? Has your financing source disappeared because the finance industry is consolidating? Or are you just not satisfied with the service your lender is providing and it’s time to make a change?
Whether it’s your first time out looking for a retail financing program or you’re in the market for a better program, finding a lender that will meet your needs can be a very frustrating and confusing process. Every bank or finance company has different requirements your business must meet before you can use their program. And every program is different too!
So, where in the world do you start looking? The answer to that question typically begins with the size of your business. The large national banks want large national retail operations as customers. These banks often have minimum annual credit volume requirements of at least $20 million or more per year. And retail operations of that size usually have someone on their staff that has a lot of experience in retail financing. They can usually fend for themselves. It’s the small to midsize business that is usually looking for some help.
If you are a midsize operation with gross revenues ranging from $3 million to $20 million your time will be better spent if you focus on midsize financial institutions that specialize in retail financing. They’re the ones looking for the multi chain store retailer whose typical geographic reach is regional. They will usually have annual minimum credit volumes of $1 million or more.
If the big national banks like the big national retailers and the midsize banks like the midsize regional retailers, does it mean that if you are on the smaller side of the retail scale your best bet is to go with your local bank? In some cases, that is the best solution, but not always. You know the old saying “the sign over the door doesn’t mean much, it’s the individual behind the desk that’s important,” definitely applies to your local banking relationship. If you have a strong business relationship with your local bank or finance company and they offer retail financing, by all means give them a call and explore the possibilities of a retail financing relationship.
But let’s say you don’t play golf with your local banker once a week or your kids aren’t on the same sports team at school. Are there any other options? Yes. Those same big national banks we were talking about earlier also sponsor retail financing programs with furniture manufacturers and furniture associations. So if you are a loyal brand customer or member of an association you might be eligible to participate in their national retail financing program. And that’s not a bad option either.
Offering retail financing can be a wonderful closing tool and it is still one of the cheapest and most effective ways to advertise. Knowing where to look and what to look for are critical components in building a successful program for your customers.
Next Issue: What to look for when you set up a retail financing program will be discussed in the August/September issue of FURNITURE WORLD.
Scott Stanberry is the President of Summit Financial Services Inc., a consulting firm whose primary focus is the retail financing segment. The organization represents both lenders and retailers in negotiating and structuring retail consumer financing programs. Questions on any aspect of retail financing can be sent to Scott at stanberry@furninfo.com.