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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

Customer Financing: What It Is and How to Offer It

Updated on:
Content was accurate at the time of publication.

Customer financing allows small business customers to pay for a purchase over time rather than make a full payment upfront. Businesses can offer financing to customers by creating an in-house process or using a third-party provider to do the work for them.

Offering a new payment option — in addition to marketing and advertising — could be a way for you to boost your business’s bottom line.

If your customers can’t or don’t want to pay for a product or service all at once, customer financing solutions give them the option of a payment plan or something similar. For example, rather than paying $300 for an item upfront, your customer could make four payments of $75.

Through a third-party provider, the customer could owe interest on their monthly payments, but the business would typically receive the full payment at the time of the purchase. The mechanics can be similar to a credit card for both the business and the customer since the business typically receives the money upfront and the customer makes payments to another party. Customer financing is also sometimes available as a store credit card.
Read more about buy now pay later options.

There are two main ways to offer customer financing to customers:

  • In-house customer financing where you set up and manage monthly payments on your own
  • Third-party customer financing where a provider manages the process of approving a customer for credit and keeping track of monthly repayments

In-house customer financing

If you’re considering offering in-house customer financing, be prepared to spend time managing the process and training employees. An important thing you’ll need to figure out is how to verify that a customer is creditworthy. You want to be sure that you’re offering financing to people who can repay you.

Additional steps could include:

  • Determining what terms you’ll offer and how a customer will repay you
  • Creating a process for tracking payments and collecting late payments
  • Making new journal entries to reflect the accounts receivable
  • Ensuring you have a process for keeping customer credit information secure


Depending on the volume, in-house customer financing can be much more time-consuming than using a third-party customer financing service because you’ll need to create your own process and spend time tracking customer payments. It may even be more expensive if you have to hire additional help to track the outstanding payments since some third-party customer financing companies don’t charge merchant fees.

Third-party customer financing

Third-party customer financing outsources the work of setting up and monitoring the program to an outside provider. Instead of running a credit check, offering financing plans and tracking monthly payments, you offer your customers the choice to pay with a financing option.

If a customer is approved by a third-party payment provider, the business will often receive the payment upfront. Like they would with a credit card, your customer will make payments to the provider rather than to you. This is less work for you, but there are additional costs that you may pay. For example, you might be charged a percentage of each transaction as a merchant fee, though this can be comparable to what you’d pay to accept credit cards or other payment options.

Customer financing from a third-party provider can follow these general steps:

  1. The business advertises that a payment option is available: Depending on how customers make purchases, businesses will do that either on their website when you’re purchasing a product or at their point-of-sale system.
  2. The customer applies for financing: If they select a financing option, the customer or a business employee can fill out a short application to apply for financing.
  3. The customer completes the transaction and the business receives full payment: Approval should happen within a matter of seconds. Once approved and the customer makes a purchase, the business could receive full payment from the financing company.

Once the purchase has completed, the customer will receive the product and begin making payments to the financing company.


  You can offer financing to people who don’t use credit cards or don’t have credit history

  You may see an increase in the average order size per customer

  You can get paid in full at the time of sale if you're using a third-party customer financing solution

  You may owe additional fees to third-party financers

  You may need to train employees if you choose in-house financing

  You'll need to spend time tracking and collecting payments with in-house financing

  1. PayPal
  2. ViaBill
  3. Synchrony
  4. Wells Fargo
  5. Financeit
  6. Snap Finance

1. PayPal

If you already use PayPal to receive payments, adding PayPal Credit as an option can be simple. It’s already built into your online checkout process and doesn’t require you to pay any additional costs aside from your current fees of 2.9% plus 30 cents per transaction. You can add PayPal Credit banners to your website to let customers know that this option is available to them.

Once your customer is approved by PayPal Credit and completes a purchase, you’ll receive payment in full. Your customer won’t owe interest — through a special financing offer — if they pay off a purchase of $99 or more within six months.

PayPal research shows that 42% of PayPal Credit users wouldn’t have made their most recent purchase if the form of customer financing wasn’t offered.

2. ViaBill

ViaBill offers customer financing to online shop customers of up to $300, with no interest. With ViaBill, customers are able to split their payment into four equal monthly installments. The first payment is taken when the customer order is processed, while the remaining three are automatically deducted for the next three months.

ViaBill can be integrated with online shopping platforms such as Shopify, Magento, WooCommerce and PrestaShop. Required information from your shopper includes their phone number, email and debit or credit card information.

If your customer uses ViaBill, you’ll pay a merchant processing fee of 2.9% plus 30 cents per transaction.

3. Synchrony

Synchrony provides small business owners the option to offer customers a store credit card. Approved customers will receive a credit card with your business name on it to finance their purchases. Partner businesses aren’t charged a fee to offer this to customers.

Synchrony offers:

  • In-store or online credit applications
  • Financing options for customer such as deferred interest or fixed monthly payments
  • Payments to your account within two days
  • Initial training sessions to help businesses get set up

Synchrony also offers program credit cards and installment loans. Their program credit cards, like Synchrony HOME and Synchrony Car Care, offer customers the ability to shop wherever they’re accepted. By becoming a Synchrony HOME partner, your business can include special offers for customers on the Synchrony HOME website, and customers can use their Synchrony card at your store to make home purchases.

4. Wells Fargo

Wells Fargo customer financing allows you to offer on-the-spot financing options to your customers. After a simple application process, approved customers will have immediate access to a revolving line of credit so they can make repeat purchases with your business.

To help you set up the financing, Wells Fargo offers training support. After a customer makes a transaction using Wells Fargo financing, you’ll receive the money in your account, typically within 48 hours.

5. Financeit

If you need to offer customer financing for larger purchases, Financeit offers credit limits of up to $100,000. You can personalize a quote to show your customer monthly payment options that fit their budget either in store with a payment calculator or online with website tools.

Financeit offers various payment plans for customers, including deferred interest, deferred payments or different interest rate options. (Though, customers should always be wary of deferred offerings if they can’t make the full payment within the allotted window.)

Once a customer has decided to use this financing option, an application for credit will be completed either by the customer or by you. When all documents have been e-signed and uploaded, the full purchase amount will be deposited in the business’s bank account. Financeit doesn’t charge a merchant fee.

6. Snap Finance

If customers have bad or no credit, they may find a financing option with Snap Finance. Snap Finance offers a no-credit-needed, lease-to-own customer financing option with up to a $3,000 credit limit on:

  • Computers
  • Mattresses
  • Electronics
  • Furniture
  • Jewelry
  • Wheels and tires

Payments are automatically withdrawn from the customer’s checking account.

Your customers won’t be charged interest, but they will be charged a lease fee that varies by customer and state. (If the customer pays off the lease within 100 days, they’ll only owe a processing fee.) You’ll receive payment from Snap Finance within two business days of a customer purchase.

Fees and borrowing amounts are accurate as of March 18, 2020.

If you’re going through a third-party payment provider, most options will be easy to set up. Many come with customer service teams that can help you get up and running if you encounter any problems.

Setting up a payment plan that you’ll manage yourself is more difficult. You’ll need to set up processes to help you determine customer creditworthiness and track monthly payments. It will require additional accounting entries as you create an accounts receivable for the outstanding payments.

Your best customer financing program depends on your business. There isn’t one program that will be the best for everyone. Some things to consider when trying to find the best customer financing programs include:

  • Fees charged to your business
  • Interest and fees charged to your customer
  • Setup, management and customer application process
  • Availability (online, in-store or at a different location)
  • Additional tools that could be helpful
  • Credit limit customers may need (a $300 credit limit won’t do much good when you’re selling a new roof)

There are no-credit and low-credit customer financing options available, including Snap Finance. Before you offer any options to your customers, make sure you understand what fees you will both be charged.

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