With interest rates so attractive, you ought to examine offering clients financing. Even for a small, full-service contractor, financing has many benefits. It helps you get to a client's budget quickly and easily. It increases close ratios. It increases control of the sale. And it allows clients to keep their savings intact.

I know it's a tough argument, because studies show fewer than 15% of remodeling projects are financed through contractors. Most of that is for roofing, siding, windows, decks, kitchen refacing, and pools. This means only about 4% is for projects of the $25,000 to $250,000 variety.

But consider this: 93% of automobile sales include financing. And over half of that is through dealers, not banks. Why shouldn't remodeling match that 93% number? It can, I'm sure. I'm thinking of Big50 contractor Airoom, a large-volume, full-service firm in Lincolnwood, Ill., that has its own bank and finances almost all of its projects. But you don't have to be big to make financing work. You simply have to understand how powerful this tool can be for sales.

Examine Good Reasons

Studies show that inexpensive jobs — handyman work and window and door change-outs — are likely to be financed through unsecured loans and credit cards. So homeowners already have a sense of what it means to use financing to improve their homes.

You can tap into that understanding of using credit to finance a home improvement. Another advantage of offering financing is that if clients say they want you to do the job, you can prevent other bids. You're providing a full solution. You're helping them avoid the pain some find in going to the bank. Think of the control you have knowing where the money is coming from, and when.

Remodelers have told me their close ratios have increased by 20% once they started offering financing. Often, clients planning projects in phases add the second into the first because financing makes it possible.

People won't share their budget, but by bringing up financing, you become a partner in helping them resolve budget issues. You get to another level. You help them decide how much money they have and what they can or can't afford.

And think of the added convenience when they get an answer to their financing question the next day (if you work with a financing company offering 24-hour turnaround).

Financing provides salespeople with the ability to upgrade because up-front money isn't required. All options truly can be offered, with cost per month easily calculated.

Hurdles to Consider

Most banks won't work with remodeling companies less than two years old but will waive this requirement if the owner secures the loans. I wouldn't recommend this for everyone, but if you are fairly well established and savvy, it's worth considering.

Many banks aren't able to provide one- or two-day approvals. I'd recommend looking for one that does. Immediacy of approval helps sales.

Many banks have one or two approaches to offer customers. Regional or national banks offer options where customers only pay what they can afford or pay off an existing mortgage, combining the mortgage with the new project.

But even today, many banks aren't interested in working with remodeling contractors that report less than $1 million in sales a year. The good news is the number of remodeling companies doing more than $1 million is increasing. I'd estimate there are as many as 8,000 contractors doing between $1 million and $8 million. This means, of course, banks should take another look. This is a huge opportunity for them.

And I think the time is ripe for contractors of all sizes and types to seek out those banks and see how their company can offer financing. Why wouldn't you want to improve your close ratio? — Walt Stoeppelwerth is a publisher of management and estimating information for professional remodelers. (800) 638-8292; htbill@worldnet.att.net; www.hometechonline.com.