How to Choose a Financing Program: A Contractor’s Guide
A practical guide for home improvement contractors on how to find the right financing program. Learn the four factors that matter most, why the funding rate beats the approval rate, how to build a provider scorecard, and why second-look programs recover lost projects.
Key Takeaways
Funding rate matters most, showing how many approved customers actually move forward.
Look past approval rates. Funding rate shows how many homeowners actually complete projects.
Pilot a new program for 30 to 60 days, and use second-look options to recover declined deals.
The financing program you offer homeowners can have a direct impact on your close rate, average ticket, customer experience, and bottom line. But choosing the right provider takes more than comparing headline rates or approval numbers.
The better question: Which program actually helps more of your customers move forward with confidence?
Start With the Right Questions
Evaluate every financing provider on four factors: approval rate, funding rate, rates and terms, and customer experience.
Approval rate: How many customers are actually approved?
Funding rate: How many approved customers move forward and fund?
Rates and terms: Are they competitive, transparent, and easy to explain?
Customer experience: Is the process simple for homeowners and backed by responsive service?
Look Beyond Approval Rates
A high approval rate can be misleading because it counts approvals that never turn into projects. A homeowner approved for only part of the project cost may not be able to move forward. One who applies for a low-rate option may get a higher-rate counter-offer and walk away. An approval only matters if it helps the homeowner complete the project.
When a provider quotes an approval rate, ask what is behind the number:
How many are full approvals?
How many are partial approvals?
How many are counter-offers with different rates or terms?
What is the most important financing metric for contractors?
The funding rate, also called the customer acceptance rate, is the most important metric, because it measures how many approved customers actually fund their project. High approval rates do not drive revenue. Funded projects do.
When you compare programs, ask for both the approval rate and the funding rate. The gap between the two tells you a lot: a wide gap signals that approvals are not converting into work.
The Financing Experience Represents Your Brand
When homeowners understand their options and get quick answers, they move forward with confidence, and that trust carries over to your company. The provider’s service quality becomes part of your reputation.
Look for a financing provider that offers:
Responsive support for both contractors and homeowners
A straightforward application process
Clear communication throughout the financing journey
A soft credit pull across all three bureaus can widen approval opportunities while letting homeowners explore options without affecting their credit score. No application fees reduce friction and encourage more customers to apply. A better experience leads to more completed applications, more funded projects, and happier customers.
Test Before You Go All In
Run a 30 to 60 day pilot before you roll out a new program company-wide. During the pilot, track:
Approval rates
Funding rates
Close rates
Customer feedback
Service issues
Don't Overlook Declined Customers
A declined application isn’t always a lost opportunity. Some providers offer second-look programs that evaluate declined applicants for alternative financing, helping you recover deals you’d otherwise lose.
The bottom line
The best financing program isn’t the one with the lowest advertised rate or highest approval percentage. It’s the one that turns more approvals into funded projects, making home improvement easier for homeowners and more predictable for your business. Ask better questions, measure what matters, and let the data decide.
Ready to evaluate your options? GoodLeap is a contractor financing platform trusted by 7,500+ active contractors, with transparent options that help more homeowners move forward with confidence.
Frequently Asked Questions
What is a good funding rate for a home improvement financing program? There is no single universal benchmark, so compare funding rates across the providers you are evaluating rather than against an outside number. The key signal is the gap between approval rate and funding rate: a narrow gap means approvals are converting into funded work.
What is the difference between approval rate and funding rate? The approval rate is the share of applicants a provider approves. The funding rate is the share of approved customers who accept the terms and actually fund their project. Funding rate is the better predictor of completed jobs and revenue.
What is a second-look financing program? A second-look program re-evaluates applicants who were declined by the primary lender and offers them alternative financing options. It helps contractors recover projects that would otherwise be lost.
Does a soft credit pull affect a homeowner's credit score? No. A soft credit pull lets homeowners see their financing options without affecting their credit score. A hard pull, which can affect the score, typically happens later if they move forward.
How long should a financing program pilot run? A 30 to 60 day pilot is usually enough to see approval rates, funding rates, close rates, and service quality before committing company-wide.
