Small Business Tips: How to Offer Consumer Financing to Your Customers

Sep 27, 2017

Offering consumer financing is one of the most effective tools for increasing revenue. That’s great for the big companies that have the luxury of offering a variety of options, but what about my small business? If you assume consumer financing is only available to big businesses, you will be glad to hear that businesses both large and small have access to financing suitable for (most) current and future customers. Thanks to the variety and availability of lending programs offered by alternative providers like

How Customer Financing Works

Essentially, consumer financing is designed to turn the browser into a buyer. This program allows customers who are deterred by upfront payment the option to enroll in an affordable monthly payment plan, instead of paying for the goods/services all at once. Offering customer financing will help your business make larger and more frequent sales, build brand awareness and increase customer loyalty.

Will my customers appreciate and like the financing option? Obviously, it does your business no good to offer customers a financing solution they do not want to use. To avoid this, consider the two main things your customers value: cost of financing and financing flexibility. Typically, consumer financing provides your customers with three levels of funding: primary, sub-prime and no-credit-check financing. This variety of financing programs ensure customers secure an option that is both cost effective and flexible.

Primary Programs

Considered the consumer’s “first look”, primary consumer financing programs approve customers that have average credit and above. They typically offer “no interest” or “reduced interest promotions” promotions to attract credit worthy buyers. In addition to attractive terms, primary programs have the benefit of decreased merchant fees. This option is best for both the merchant and the customer. However, it can be difficult to be approved, since only individuals with stellar credit are accepted.

Sub-Prime Programs

Sub-prime, or “second look”, programs are designed to approve customers with below average credit. Since these programs involve more risk for the lender, there is usually a higher cost for the merchant. Even so, these programs can account for nearly 80 percent of a business’ respective customer base because most customers will meet the approval criteria of sub-prime financing. Keep in mind that approval for these programs do involve a few extra steps (proof of income, proof of residence, even personal referrals).

No-Credit-Check Programs

Tertiary or “third look” programs approve an extremely high number of applicants – even 100 percent, depending on the lender. These programs are extremely customizable and are dependent on the client’s cash-flow needs, margins and risk tolerance. With EMB, merchants can secure no-credit-check financing programs to offer their customers; this special type of lending program involves a no credit check requirement. For some primary and second-look consumers, these programs are a way to reduce inquiries on their credit report or to establish/rebuild credit. No-credit-check programs, on the other hand, provide consumers with bad credit or no credit with an option as well.

If you are worried that today’s economic climate might affect your customers ability and willingness to make large purchases, consider how consumer financing can help. In using these programs, small businesses immediately see their sales increase. Whether you are a small brick and mortar shop or a multi-million-dollar e-commerce store, consumer financing programs are a great way to match the individual needs of your customers.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.