How a Multi-Lender Solution Can Support Your Growth

Trying to find the right lending partner can sometimes feel like a Goldilocks problem. How do you find a solution that feels “just right”? Too restrictive, and you lose customers who need help the most. Too complicated, and you lose them in the process. Choosing the right fit for your HVAC business is one of the most consequential decisions you can make because when a customer gets declined, you can lose both a sale and a potential long-term customer.

Is One Lender Enough?

Navigating HVAC and other home improvement industries is complicated enough. Some contractors choose to work with a single lender to simplify their process. However, each lender uses its own underwriting criteria, which means a homeowner won’t have any good options if they are declined. With only one leader, a single “no” can end the conversation.

Pros

• Simplicity in training sales teams on one product
• Consistent processes and paperwork
• A trusted relationship with a single rep

Cons

• Lower approval rate for applicants
• Most prime lenders only work with credit scores of 700 and above
• Inability to close some jobs

While working with a single lender can sound attractive, in reality, you won’t be able to serve as many homeowners or offer them as many financing options.

The Manual Approach

When contractors realize they need more than one lender, many try to piece together a solution on their own. That often means signing up with multiple lenders and creating a patchwork process. One lender gets the first look. If that doesn't work, the contractor moves to the next. That means a new portal. A new app. Sometimes another credit pull.

For the customer, it’s frustrating — especially if they were told upfront that financing would be quick or easy. They understand why they’re being asked to apply again, but it doesn’t feel great. They’re already feeling the sting of a decline, and now they’re being asked to start over.

Pros

• Highly customizable - the contractor chooses which lenders to work with
• Existing lender relationships stay intact

Cons

• Negative customer experience
• Risk of multiple credit pulls
• Time-consuming and hard to scale

So while the manual approach is well-intentioned, it creates problems at every level, and it doesn’t scale.

Marketplace Lending Approach

Now let’s talk about marketplace lending.

This model gives customers access to multiple lenders in one place — typically through a grid or listing that lets them view and compare options side by side. On the surface, that sounds like a win: more transparency, more choice, and theoretically, more competitive offers.

But in practice, that choice often leads to confusion. Customers are left to guess which lender they might qualify for, or which offer makes the most sense for their situation. That can cause friction, delay, or even drop-off.

On top of that, there’s usually no intelligent matching happening behind the scenes. It’s just a buffet of options, with the customer doing all the work. And because they may apply with multiple lenders, there's also the risk of multiple credit pulls.

Pros

• Customers can compare multiple lenders
• Potential for competitive rates

Cons

• Too many choices can cause confusion
• Inconsistent experiences across lender portals
• Multiple credit pulls

With marketplace lending, the customer experience is inconsistent. Each lender has their own portal, process, and underwriting flow, which means the customer journey gets fragmented.

Waterfall Lending Approach

This brings us to the final approach: waterfall lending.

Waterfall lending is an automated process where a customer’s financing application is submitted to a sequence of lenders - one after another - until an approval is found. There is one application and one credit pull. A built-in chain of lenders reviews the application in turn, from prime to subprime.

Pros

• Single application for the customer
• Less manual work for the contractor
• Broad credit spectrum coverage

Cons

• Can be time-consuming because each lender reviews the application before it moves on to the next lender

The best part of waterfall lending for contractors is that it happens behind the scenes. The homeowner experiences a seamless, single-application process while the system maximizes their chances of approval.

Finding Your “Just Right” Lending Solution

When it comes to offering financing as a home improvement contractor, not every approach is built the same. The difference can significantly improve your ability to close more sales and grow.

A single lender? Too rigid.

The manual approach? Too complicated.

Marketplace lending? Too overwhelming.

At FTL Finance, we choose the waterfall lending approach for its many advantages: one seamless application, an automated cascade of lender options working behind the scenes, and a process designed to approve more applications. While some waterfall lending solutions can add a bit of time to the lending process, FTL typically provides decisions to homeowner applications within 15 minutes.

In the end, finding the right lending partner is a lot like Goldilocks finding the right chair. Too rigid, complicated, or overwhelming, just doesn’t feel as comfortable as the approach that simplifies the process for you and your customers.