Page 29 - Oil and Energy January 2013

January 2013 • 29
Equipment Financing
Closing Rate
ONE OF THE BIGGEST OBSTACLES TO SELLING
new heating and cooling equipment is the
customer’s concern about paying the cost.
Companies can improve their closing rates
with an attractive financing program that
gives customers what they want, according
to Peter Krajsa, Chairman & CEO of AFC
First Financial Corp.
AFC First Financial offers a national
energy loan program that any qualifying
contractor can use, as well as special rate-
subsidized programs inMaine, Pennsylvania
and other states. The programs offer
ease-of-use and attractive terms that are
conducive to doing business, he said.
Many contractors who offer financing
seem to focus on promotional interest rate
programs that offer a “teaser” rate for a
period, which then can convert to a very
high interest rate. These appeal to only a
small portion of the consumer marketplace,
typically homeowners who already have the
cash to make a purchase.
The AFC First programs enable
contractors to appeal to the much broader
market of customers looking for affordable,
longer-term financing by attaching a fixed
monthly price to a proposal – an essential
incentive for prompting customers to go
forward with energy efficiency improve-
ments, according to Krajsa.
“We encourage [contractors] to do
that,” he said. “It’s very helpful to put a
low monthly payment number in front of a
customer. The best closers use a good-bet-
ter-best set of options and tell the customers
about the different ways they can pay for the
project, including promotional finance and
monthly payments. By doing that, they have
removed the customer’s greatest concern of
how to pay for it without forcing only one
type of financing onto their customers.”
Energy loans can fit nicely into a custom-
er’s budget, because the system improvements
often generate energy cost savings sufficient
to offset the loan cost, Krajsa said.
REACTIVE AND PROACTIVE
There are two basic types of customers
buying equipment, according to Krajsa, and
a good financing program is helpful with
both types. The first is the reactive customer
whose equipment is failing. The second is
the proactive customer who is looking to
improve energy efficiency through a more
“whole-house” approach.
The vast majority of projects are urgent.
The customer needs the work done as
soon as possible, and the cost often falls in
their financing “Twilight Zone” – too big
for a credit card but too small for a home
equity loan.
Customers that are looking to improve
energy efficiency generally will be looking
for a home energy audit and will take a more
thoughtful, deliberate approach. They may
or may not have adequate home equity for
a loan, but they will be looking for a lower
interest rate than they would get on an
urgent repair. AFC First is the nation’s first
private, non-utility sponsor of whole-house
Home Performance with ENERGY STAR.
AFC First’s special programs include
Pennsylvania’s Keystone HELP, which
offers fixed-rate 10-year loans as low as 2.99
percent, and Efficiency Maine’s program
at 4.99 percent. Its national EnergyLoan®
program offers 10-year fixed-rate loans in
all states with interest in the range of 13 to
14 percent with same-as-cash options.
AFC First strives to make its programs
user friendly for contractors and customers
alike. Contractors are given custom
applications links for their websites, and
customers can apply online or by phone
using a toll-free number. Seventy percent
of applications are approved, and approvals
are generally granted in one hour or less.
A strong financing program helps
differentiate a contractor, according Krajsa.
“We have contractors who promote
the program and use our logos in their
marketing. It gives them another arrow in
their quiver for promoting themselves.”
He said some contractors resist financing
programs and say that all their customers
pay cash, but he believes those contractors
are losing work to competitors who help
their customers pay for projects. AFC First
contractors have a choice of how involved
they get with explaining the programs to
customers. They can promote the financing
themselves, or they can simply direct
customers to AFC First for information.
Krajsa has a goal of getting AFC First’s
rates under 10 percent, and he thinks it is
possible because EnergyLoans perform well
compared to other types of loan, with lower
default rates.
CONTRACTORS MUST QUALIFY
One of the key factors driving the strong
performance is AFC First’s programs is the
quality of the participating contractors.
Only Approved Contractors who have been
vetted for financial and ethical stability
and meet the standards of the AFC First
Energy program may perform the work.
Prerequisites include:
• Minimum 3 years in business, history
of financial stability and evidence of
$50,000 net worth or compensating
factors;
• Satisfactory company and personal
credit histories
• Satisfactory Better Business Bureau
rating;
• Satisfactory customer and trade
references;
• Overall reputation for a high level of
service and workmanship.
For more information, visit the AFC
First website atwww.afcfirst.com.