Outside Financing

Discussion in 'Business Operations' started by Team-Green L&L, Dec 20, 2006.

  1. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Posts: 1,776

    Since we a have begun to offer services that are stretching beyond a customers normal purchase pricing, I am interested in an outside finance company to use for larger proposals. Has anyone done this and how should I go about resourcing?

    Secondly, what about networking with a tax agent to offer installs against a tax return? What's a better investment for your tax return than your property?
     
  2. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Posts: 3,466

    Get them to put it on the charge card. They can get points if the do that. Let them get a home equity and pay it off and get the deduction on their taxes.
     
  3. Grass-Masters

    Grass-Masters LawnSite Senior Member
    Posts: 424

    Partner up with a loan officer, maybe you can make a few bucks on refinancing there home. Many people do this on large home improvement projects.
     
  4. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Posts: 1,776

    Loan officers are as bad as bankers. How would you get your "foot in the door" in that demographics system?
     
  5. Grass-Masters

    Grass-Masters LawnSite Senior Member
    Posts: 424

    Actually, I used to work as one part time. They are always looking for new ways to make money just like us. Ask around for a friendly loan officer, I am sure you would be surprised at the responce.
     
  6. J Hisch

    J Hisch LawnSite Senior Member
    Posts: 952

    Finance it yourself. Here's how it is done, get materials and labor down and then charge a good but fair interest rate and set the terms you are comfortable with. I do not advise this with smaller job, such as a couple of thousand, but for 20k and up I'll be the first in line to finance the remaining for them. If they fail to pay you can always have an interest in the house. Seek out legal help to allow you to do this.
     
  7. Matt k

    Matt k LawnSite Member
    Posts: 60


    I don't see the value in this? Lets say you get the materials down, if you are financing $10,000 do you have a safe net for cash flow? At 8% interest on lets say a 48 month term, it would take you 3.4 years to get your money back. That does not seem very advantageous. When banks and finance companies lend money, they are getting the money from somewhere else and are paying points on it just like you are. Not anywhere near as high, but they are still paying.

    I would get in a relationship with a local bank that you can refer your customer to. They will have or will custom make marketing material that you can hand out and/or even have a credit application the customer can fill out on the spot. This not only will help the deal along, it will give you your money at closing and you have now started a relationship with a bank that you can court for future financing needs in your company.
    JMO
     
  8. J Hisch

    J Hisch LawnSite Senior Member
    Posts: 952

    I didnt mention an interest rate. It wouldnt be good if you do a few installs a year, but when you do 5-6 a month in the 20k range you can put quite a bit in your pocket as the years go by. Not recommended for a small operator due to cash flow. 12-18% interest on average of 1 job per month who finances with us adds to quite a bit. most will pay a few cunchs of cash over a year or 2.
     

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