Furniture Dealers Seek Finace Options for Customers with Average Credit

Financing has always played a very important role in the marketing efforts of furniture retailers.  Drive past any furniture store and you will most likely see messages in the windows that read "financing available",  "No interest financing", or "no payments until...".  Furniture stores use financing programs to make their large ticket items more affordable to the general public.  When the economy went south in 2008 many of the programs that the furniture dealers relied on disappeared or the credit restrictions where increased to the point that furniture dealers saw large decreases in approval rates leading to declines in sales at a time when they desperately needed them.  Only those customers with near perfect credit were granted access to credit with these programs.

Fast forward to today. Not much has changed with the primary finance programs of the major providers. They are still not approving what they used to pre-2008.  However, multiple programs have been introduced to the industry that focus on those individuals with poor credit (Scores below 630).  Some of them can even approve individuals without a credit check.  They work because the debtors in these programs are charge exorbitant amounts of interest and fees to offset the risk associated with financing such high risk individuals on an unsecured basis.  This also enables the lender to keep the cost to the merchant or retailer relatively low (similar to what they pay for prime programs) so they have become popular in the industry.

Now the issue that furniture dealers face is how to get financing for the person who has "average credit" or scores from 630-720.  Many of these customers are declined by primary providers, but these types of customers would never agree to the fees and interest attached to no credit check or leasing programs. In their minds they have good credit and expect the same kind of terms and promotions offered by primary programs.  East Bridge has seen a large increase in dealers contacting us looking for that "middle ground" program.  Luckily for them, there are lots of 2nd look options available. The problem that dealers run into is that the interest rates charged to the debtor in these programs are generally in the high teens or low 20's (which is a reasonable rate for unsecured debt to someone with less than perfect credit), so the lender must increase the fees to the dealer to make up the rest of the risk. This creates the unusual circumstance where a dealer will pay less in financing charges for someone with a poor credit score than a decent one.  With current and changing lending laws in the debtors favor, there isn't any magic solution to this problem.  Dealers have begun to understand that if a 2nd look program is inexpensive to the retailer, the approval rate will be poor because there is little room for risk that lender can take for approvals.  The key to success for a dealer is to find a program that works within their margins but can still be effective in approving average credit.  Dealers need programs that are designed to fit into their sales model based on what they sell, how they sell it, their customer demographic, and where they sell it (online, in-store, etc).

Contact East Bridge Funding to learn more about the types of furniture financing programs that might work for your business.

East Bridge Launches Consumer Finance Program for Online Retailers.

East Bridge Funding (EAST BRIDGE) has launched a new consumer program that allows online retailers and service providers the ability to offer their customers the same finance options, including promotional programs, as brick and mortar stores. This program is available now to businesses nationwide selling products online or over the phone to customers within the United States.

 “Consumers who shop online for major purchases want the same financing options that are available to customers purchasing these products and services from local businesses.  Why should consumer finance programs be exclusive to brick and mortar retailers?” asks John O'Connor, Sales and Marketing Director of East Bridge Funding.  “Online retailers have low overhead and can deliver direct pricing that brick and mortar stores can't compete with, but one advantage that brick and mortar stores have had is the ability to secure effective consumer finance programs.  Many banks and financing companies have not offered these types of programs to businesses selling products and services online because of an increase in assumed risk associated with an online sale. We feel we have put together a program that works for the online retailer but address and controls the added risk in the process.”

John continued by saying “To be successful, the program must be easy to use from both the business side and the customer side. This program has the ability provide instant decisioning on submitted applications and the entire paperwork process is handled electronically, making it fast as well as inexpensive. Businesses can transact with consumers over the phone or the web and execute the needed documents for funding via email.  The process is quick and effective and retailers won't need to make any major changes in their sales process to utilize the program.”

The program is available today to businesses that qualify.  A due diligence process is required for approval to use the program. Companies must be in good financial standing and will be required to submit specific documentation.

US Online Retail Sales Rise 17% In 1Q

Online retail spending increased 17% in the first quarter of this year according to a recent Wall Street Journal article. East Bridge has seen a large increase in the number of online retailers contacting us looking for finance programs for their products or services. Putting together financing programs for online retailers brings new challenges to lending institutions. Online retailers typically have smaller margins than that of brick-and-mortar stores so it is more difficult for them to absorb the costs associated when offering programs to customers. In addition, because there is no face to face interaction with customers, lenders and retailers have to take extra steps to make the transaction simple and easy as well as preventing fraud. East Bridge is working with a number of lending sources on new programs for jewelry financing, furniture, and specialty products.

Another Lender Says Goodbye to the Healthcare Industry

Much like Capital One did a few years ago, Chase is discontinuing its use of their Health Advance program for the elective medical industry. This will have a widespread effect as they were one of the larger players in the industry. One of the industries most effected will be the dental industry. Chase did a lot of dentistry financing. You can read more about their exit on the American Dental Association website.

http://www.ada.org/news/6932.aspx

East Bridge Funding Launches At Need Finance Program for Funeral Home Industry

New consumer finance program helps funeral homes better serve their families in time of need.

May 10, 2011 - Charleston, SC: East Bridge Funding (EAST BRIDGE) announces the launch of a new consumer finance program built exclusively for the funeral home industry. This is a nationwide program and is available now to most funeral homes. Using this program, funeral directors will be able to offer their families an at-need financing solution to help pay for some or all of the costs associated with a funeral.

“Funeral costs can be expensive and if a family has not financing pre-planned for the death of a loved one, many families find themselves unable to pay for the services that they want,” said Daniel O'Connor, Managing Director of East Bridge Funding. “Most funeral homes offer pre-need insurance, which a family can purchase prior to the time of death in order to cover most of the expenses associated with a funeral. If a family does not have this type of insurance, the expenses have to be paid for out of pocket and when a funeral can cost an average of $7,000 to $9,000 or more, it can put the family in a difficult spot. Historically, there haven’t been many at-need financing options for this industry which is why we felt compelled to bring a service like this to market”

The new program has an attractive APR for the debtor, is low-cost to the funeral home, and has a quick and easy application process. “We used a new lending relationship for this program and they have been great to work with,” continued Mr. O’Connor. “They understood what we where trying to do and share the same sense of duty about helping this industry. We have offered at-need programs in the past but they where difficult to implement and expensive to the funeral home to use so we didn’t have much luck with them.” Mr. O’Connor hopes that the industry will have success using the program going forward. “I think that with today’s economy, more and more families are going to need services like this and we want funeral homes to be prepared to help them when the situation arises.”

To use the program, funeral homes must be in positive financial standing and must have been in business for 2 years or more. It is required that funeral homes wishing to use the program submit documentation to substantiate this. Setup takes approximately 2-3 weeks.

About East bridge Funding

East Bridge Funding is a receivables management company offering unique consumer finance programs to businesses. Services provided include installment contract funding, accounts receivable financing, private label credit card programs, account servicing and bad debt collections.

For more information visit www.EastBridgeFunding.com or contact Daniel O'Connor, Managing Director at 843-971-7541, doconnor@eastbridgefunding.com.

What are we seeing going into 2011?

Not much changed in 2010 compared to 2009 with respect to the major banks' consumer financing programs. Banks are still limiting access to these programs for retailers and service providers. For larger companies and industries that have been able to hold onto their programs, they have seen a continued tightening of approval criteria for applying customers just as they did last year.

Fortunately 2010 brought a resurgence of alternative finance companies willing to step in and take advantage of a large business opportunity left open by the major banks and we believe the trend will continue in 2011. While these programs can be more expensive to the dealer due to the risk associated with today's economy, they are just as well capitalized as the big banks' programs of previous years and can offer just as many promotional programs and features (sometimes more).

What we are also seeing is a change in the attitude of retailers and service providers who seem more open now to doing business a little differently than before which allows companies like ours to get really creative in helping clients recapture some of the lost revenue they have experienced by not having adequate financing options in place for their consumers.

East Bridge Funding looks forward to 2011 as we will begin utilizing brand new capital sources which will give us the ability to create much more attractive terms for both the dealer and the customer. We wish all of our funding sources and clients a fantastic year and is excited to see who we can help next.

Consumer Finance Programs in the Current Economy

With the credit markets tightening up everywhere, businesses are finding it difficult get customers approved for financing through their current consumer finance programs. Many of the big banks that are players in the retail finance industry are also players in the mortgage industry as well as other sectors that are not performing to par. This has forced them to tighten up on credit and take a much more conservative approach when deciding who to approve and in what markets they want to continue to offer financing in. This is bad news for businesses as less approvals means less sales and revenue and for many businesses no financing means NO REVENUE.

Fortunately there are solutions to this problem. This situation has created an excellent opportunity for smaller finance companies as well as indirect lenders and other debt buyers to step in and fill the void. Typically these institutions find it difficult to compete with the big boys on pricing so they typically take on the role of a 2nd look option for a business's customers. Many of these small finance companies and debt buyers aren't regulated the same ways as the big banks like GE, Citi, Wells Fargo, Chase, etc so they can remain versatile and can approve a wide arrange of credits even in tough economic times.

Using smaller finance companies and debt buyers will solve a businesses approval rate problems and can provide great consumer finance programs but not without a price. These institutions have a higher cost of funds then the big banks and usually higher overhead so the programs are more expensive in terms of discounts. However, it is far less expensive then having a customer walk out the door because you can't get the financing for them.

Our office has been flooded with calls from businesses experiencing consumer financing trouble, but fortunately we are able to help them. No one knows how long this credit crunch will last. The businesses that survive will be those who find acceptable alternative finance solutions until the big banks bounce back.

For further information about these alternative financing sources visit www.eastbridgefunding.com.