Take Advantage Of Customer Financing For Small Business – Read These 9 Tips

There comes a time in customer financing for small business when it’s necessary to consider ways to finance the goods and services you sell to your customers. In fact, did you know that more than 70% of businesses make some type of financing available to their customers? If you’re curious about how consumer financing for businesses can help your small business grow, keep reading for our top tips on getting started.

1. Offer A Discount For Early Balance Payoff

The first tip is to offer a discount for business financing for customers who pay off their balance early. This can be done either as an incentive or as a reward. A discount of 10% would be considered generous and might help win over customers with good credit, but it may not make much difference to those with poor credit history. Additionally, it’s important to take into account the interest rate of your loan before setting the amount of this discount.

2. Let Customers Pick How Often They Want To Get Bills

The second option is to make it so that customers can choose the billing frequency themselves. You could give them a few options, like monthly, quarterly or yearly. Customers might prefer this way of billing because they want to pay their bills on time but don’t mind waiting for their invoice until after the first of the month. Or maybe they want their invoice sent out every three months so that it doesn’t get lost in the shuffle of business mailings.

Note: Consumer financing for merchants is a type of merchant cash advance designed specifically for businesses that sell to consumers. This type of financing is typically used by consumers who need to finance purchases, such as big-ticket items like cars, boats and RVs.

3. Offer Different Payment Options Based On Your Customer’s Credit History

Credit scores are a way for lenders to determine how likely a borrower is to repay a debt. They’re based on a number of factors, including the length of your credit history, and whether you have any past due accounts, missed payments or new credit accounts.

Through a small business offering financing to customers, a business offers an alternative payment method that allows people to make purchases with money they don’t yet have.

4. Don’t Require A Down Payment

Of course, there are other ways to pay for your products too. Customers can pay for the product in full, or they can choose to make payments over time with no down payment. If you want customers to pay with a down payment and then the rest, later on, this is also an option you can offer them. You should always consider what type of consumer financing for merchants plan works best for your business and your customers so that everyone is happy when buying from you!

5. Offer A Direct Payment Plan If You Make Products That Need To Be Serviced Or Replaced Frequently

Customer financing programs for small business owners can be a great way to increase sales by getting more customers to buy more products. Offering a direct payment plan is a great way to build a relationship with your customers. If you sell a product that needs to be serviced or replaced frequently, offer them the option of paying for it in monthly instalments. Tell them that you can schedule automatic payments for them, so they don’t have to worry about forgetting anything.

6. Accept More-Flexible Payment Options

Flexible payment options help you attract new customers, as well as keep your existing ones happy. They are especially important if you’re offering a complex service or product such as IT services or legal assistance.

7. Try An 18-Month Financing Option With 0% Interest

If the length of a loan is important to you, consider an 18-month option with 0% interest—it’s a great deal. Interest rates can make a huge difference in the total cost of a loan.

There are several things to look out for when considering these types of loans:

• Make sure there isn’t a prepayment penalty that will hurt your business if you pay off the loan early.
• Don’t be misled by teaser rates that sound too good to be true. They often are!

8. Be Upfront About Interest Rates, Prepayment Penalties, And Other Fine Print

It’s important that you are transparent with your customers about the details of their loans, so they know what they’re getting into before they sign on. Tell them how much money they’ll need to pay back each month and how long it will take them (based on interest rates).

Also disclose any prepayment penalties or stipulations in your agreement, such as late fees or higher rates if payments are missed.

9. Make Sure The Transaction Is Seamless And Secure.

Because payments are one of the biggest concerns for customers, make sure your payment processor is PCI compliant and that you don’t store credit card information on your servers.

Final Words

We hope you enjoyed our guide to consumer financing for small businesses. Now, it’s time for you to decide which option is best for your business and get started on securing that funding.