Business Insights

Why understanding home improvement lending can matter more in a cautious 2026 market

Contractor-offered financing, explained — part 1:

Deals are stalling. Homeowners are hesitating. If you’re a home improvement contractor in 2026, you’ve likely felt it:

• Homeowners asking for more time to decide
• Projects getting quoted but not closing
• Seemingly-sure sales suddenly ghosting you
• Cash flow feeling tighter than expected

The work is still out there — but homeowner decision-making has slowed. With interest rates remaining higher, rising project costs from inflation, and general economic uncertainty, homeowners are more cautious. Many want the upgrade, but hold back when it comes time to commit.

For contractors, these factors might mean:

• More competition for each qualified lead
• More challenges with your close rate
• Fewer opportunities to rely on backlog alone

When demand becomes more selective, how bids are presented can matter more.

Why homeowners are hesitating — and what you can do

Interest rates remain elevated, which means many homeowners are choosing to stay put and spend some money on improving their existing home. But the Harvard Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA) report projects slower year-over-year growth toward the end of 2026. Meanwhile, many contractors are dealing with greater consumer price-sensitivity, and higher labor and operating costs than just a few years ago.

For contractors, these factors often show up as:

• More inbound inquiries — but slower customer decisions
• “We need to think about it” becoming a more common response
• Increased focus on monthly affordability rather than total cost

You may ask: Does offering financing actually help close jobs in a higher-rate market?

The answer in many cases, is yes. Understanding how to effectively offer financing can help you better influence how homeowners decide on a deal. Homeowners who feel they have more payment options can often overcome concerns and commit to a project.

This is where offering financing can become a practical tool — not to create demand, but to help move your viable projects forward.

Why is understanding how to offer financing key for home improvement contractors?

Today’s market can be navigated better if you can confidently and responsibly offer homeowners financing options. And a full service banking partner can help make that process smooth, either with the bank as a direct provider (bank-branded financing), or through a relationship with a manufacturer, trade organization, or franchisor (private-label financing). Regions offers both — and the training to do it right.

When you follow best practices regarding financing options, you can be better positioned to:

• Keep projects from stalling over affordability concerns
• Maintain scope rather than cutting pricing too quickly
• Have more productive conversations earlier in the sales process

How can financing help with cashflow and payment predictability

When you understand how financing integrates with project scheduling and billing, you can deal with fewer payment surprises in certain situations, as cashflow shifts from an accounts-receivable (invoicing-and-collections) model to direct payments from the bank at the time of job completion (or even sooner with staged-funding programs).

Now, financing alone may not solve cash flow constraints, but it can complement disciplined operations by reducing uncertainty around customer payment behavior.

The bottom line

We understand that contractors don’t need theory — they need practical execution. That’s why Regions Home Improvement Financing offers live and on-demand training for contractor owners, admins, and sales teams. We can help you:

• Understand best practices for advertising financing
• Introduce payment options naturally during the sales conversation
• Explain that approval and terms depend on the bank and customer credit
• Answer basic homeowner questions confidently and compliantly

It’s not about pushing financing. It’s about making sure it’s available when it matters.

Because in many stalled deals, the issue isn’t whether the homeowner wants the project — it’s whether they feel comfortable with how to pay for it. It’s all about reducing friction.

In Part 2, we’ll focus on how you can build your understanding of financing through training, process design, and support from experienced banking partners — including how Regions Home Improvement Financing works with contractors to help contractor sales teams offer financing responsibly and compliantly.

If you’re ready to learn more about our loan programs right now, visit this page.