Contractor Financing Guide · Awareness

Contractor vs Customer Financing

By the Hearth team · Last updated: July 2026

TL;DR

The short answer

The terms get used interchangeably but point in opposite directions. Customer financing (homeowner financing) funds your customer's project — a lender pays you, the homeowner repays the lender monthly. Business/contractor financing funds YOUR company — lines of credit, equipment loans, materials terms. Most growing contractors eventually use both; platforms like Hearth focus on the customer side: 18 lenders, $1,000–$250,000 projects, no per-loan dealer fee.

Customer financing: revenue side

This is the sales tool. The homeowner sees a monthly payment, a third-party lender funds the project at start, and you carry no credit risk. Cost structures vary by platform — flat subscription (Hearth: most companies invest $2,000–6,000/yr, $0 per loan) versus per-transaction fees (commonly 3.9%+) versus lender dealer fees. It exists to win jobs and protect scope on big tickets.

Business financing: cost side

This is working capital: credit lines that bridge receivables, equipment loans, supplier terms for materials. It shows up on your balance sheet, requires underwriting your business, and exists to smooth cash flow — not to close sales. Different product, different risk, different provider ecosystem.

How they interact

Customer financing quietly improves your working-capital position: lender-funded projects pay at start instead of on the homeowner's cash timeline, shrinking the receivables gap that business credit lines exist to bridge. Contractors who finance a meaningful share of revenue often find their working-capital needs drop.

FAQ

Which one should I set up first?

Customer financing, for most trades — it's revenue-generating rather than cost-bearing, and funding-at-start reduces your need for the other kind.

Does offering customer financing affect my books?

You get paid like a cash job at project start. No receivable from the homeowner, no loan on your balance sheet.

Is Hearth business financing?

Hearth's core product is customer financing (homeowner loans via an 18-lender marketplace) plus sales tooling — quotes, invoicing, payments.

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Keep reading: What is contractor financing? Fees explained 2026 company guide